In order to be competitive, a company must provide superior value to customers while maintaining healthy margins. This allows businesses greater flexibility to use price as a competitive advantage and self-fund improvements. This requires analyzing and improving internal costs (variable and fixed costs) and external costs.
Given a methodology for mapping processes, how to determine value provided and reduce steps, time, costs to improve quality.
EPISODE 25: Summary
Before we get into the details of achieving status as the Lowest-Cost Producer within your market, let’s tackle the difference between cost and price. LCP status is simply producing a product or delivering a service better and faster than the competition. That means if you don’t change the price you will have better margins than the competition or you can reduce the price and have the same margin as the competitor - both are excellent positions in the market.
You can use the additional margin to increase your marketing spend or price reductions, which will not hurt you, to buy market share from the competition. Usually it will force them to do the same and because of lower margins they are jeopardizing the health of the company.
The easiest method, especially if you are starting from scratch, is to use the value mapping process.
EPISODE 26: KEY TERMS
EPSIODE 27: LCP PART 1
EPISODE 28 LCP Part 2
Next Show/Chapter 10: Supplier Value Added
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