"Success Factors for an Ultra-low Price StrategyIt is still unclear whether companies can sustainably generate adequate profits with ultra-low price strategies. Nonetheless, the success factors for such a strategy are quite clear:
1. Think “simple yet robust”: A company must strip down a product to the bare essentials, but without making it too primitive or rendering it dysfunctional.
2. Develop locally: The company must develop the product in emerging markets; that is the only way to guarantee that it meets the customer requirements in the ultra-low price segment.
3. Lock in lowest cost production: This requires the right design and the ability to manufacture in the lowest wage locations which still ensure adequate productivity.
4. Apply new marketing and sales approaches: These will also require keeping costs as low as possible, even if that means forgoing traditional channels and approaches.
5. “Easy to use, easy to fix”: These two aspects are of paramount importance, because customers may lack the background to understand complicated functionality and service providers may lack the resources to make anything but the most basic repairs or adjustments.
6. Provide consistent quality: Sustained success is only possible if the quality of ultra-low price products is not only adequate, but above all consistent.
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The key challenge in the ultra-low price segment is to find an acceptable level of value to customer which will attract enough buyers and still keep costs at extremely low levels."
Trechos retirados de "Confessions of the Pricing Man: How Price Affects Everything" de Hermann Simon.
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