Cheapest reliable alternative
Posted by andreasw on Aug 19, 2010 at 12:19 am
For most products and services, most of the time, people sign up for the Cheapest Reliable Alternative Plan.
If everything appears to be the same, then of course they’re going to pick the cheapest one that’s good enough.
In the face of this understandable strategy, you have a few choices:
You can be cheapest (difficult to sustain).
You can be more reliable (great if you can figure this out).
You can be redefine the playing the field to be the only one (most preferred).
Buying a new microphone or lights for your DJ business doesn’t do any of these three to your competitive status, it merely makes you feel good. Same with re-organizing your office, painting the parking spaces or buying a new laptop. They merely keep you where you were.
The scalable, profitable strategy is to change the game, not to become the most average.
The book, Blue Ocean Strategy, is a great read on this subject. The authors, W. Chan Kim and Renée Mauborgne, give the reader strategies to shift their offerings from “red oceans” – shark infested and highly competitive market space, to “blue oceans” – free of competition.
For the strategist in you, here is a Harvard Business Review article that compares Blue Ocean Strategy to Michael Porter’s classic Five Forces of Competition (this last link is a You Tube interview with Michael Porter).
What’s your experience, have you found some Blue Oceans in which to swim? Tell us about it…
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