Cost leadership: This involves selling at a very low price and beating the competition by offering low prices. Examples of this are Club Tea, Fruna Ice Cream and Bic pencils. In order to sell at a very low price, companies need to produce large quantities to take advantage of economies of scale and thus be able to reduce their costs. While this strategy is valid, it rarely philippines business mailing list works for a small company. This is because it is difficult for them to have the size to be able to produce at very low costs. Those small companies that offer very low prices usually do so at the expense of their margin and profit, and while they manage to get customers, they are usually not very profitable businesses.
Leadership in differentiation: This involves selling products with attributes that make them unique, different from their competition. The more different they are, the more expensive they can be. Examples of this are Dilmah Tea, San Francisco Ice Cream or Mont Blanc pens. Each of these brands has added attributes to their products that allow them to charge much more.
Keep in mind that price conveys quality. If your product is different, and you decide to sell it too cheaply, your customers may not perceive that the product is special. They will think that because it is so cheap it must be of poor quality.
This could be an interesting path for many small businesses, considering that they manage to achieve a good margin with just a few units.
Focus: This involves targeting a specific customer segment and becoming the best option according to the needs of that segment. For example, a hotel could focus specifically on the needs of companies and offer what they value (event halls, availability for many people, large restaurant, compliance with safety standards, easy payment options, etc.). These characteristics are different from those that a foreign tourist, a couple, or a passenger passing through would value. In this strategy, the key is not to be cheap or have many attributes, but only to meet the needs of a specific segment. This strategy is highly recommended for small companies, as long as they manage to find an interesting segment.
With this in mind, it is worth asking: