4 ms·

Agreed, but if I were in those industries I would market the superior experiences those low-costs allow us to deliver, with price merely as an enabler (makes pr

by wensing 16y ago

Agreed, but if I were in those industries I would market the superior experiences those low-costs allow us to deliver, with price merely as an enabler (makes product a viable alternative to commodity/free option, or an accessible entry into something previously reserved for kings). Example #1: Zappos has low costs vs. bricks and mortar so they can afford to do free shipping overnight. Example #2: Southwest has low costs so they don't have to charge for bags. Example #3: ING Direct has low costs so they offer a better interest rate.

feral 16y ago
Counter-example: Ryanair is a hugely successful airline business in Europe. Its advertising and marketing strategy is about low price above all else, and unashamedly so. Look at their garish and ugly website: http://www.ryanair.com/en http://www.ryanair.com/en Count how many times they use the word 'cheap'. Read the wikipedia article, which mentions how badly they treat customers, and their rapid growth and financial success: http://en.wikipedia.org/wiki/Ryanair http://en.wikipedia.org/wiki/Ryanair Sometimes low-cost, sold as low-cost, works well.
- ssp 16y ago
  Ryanair has taken the low-price aspect to an extreme too. For the flights I care about, it's generally something like £5, but once in a while it's literally £0 plus airport fees. I have never been treated particularly badly by them. You don't get anything that might be included in a more expensive flight such as checked bags, a meal, assigned seating, etc., but I don't really care about those things anyway, certainly not for 1-3 hour flights within Europe.
  - riffraff 16y ago
    Ryanair also mastered price making. Prices vary in a way that is almost scaring from day to day, if you try to get a last minute flight you may end up with a hundreds of euros or half penny depending on their expected load, while traditional companies are way more rigid.
- cookiecaper 16y ago
  See also WAL-MART. Wal-Mart doesn't purport to do anything better than its competitors really, and I don't know how they could; they all sell the same things, and so price is the only real competition (environment counts too, but it's a tertiary point). Wal-Mart is now one of the biggest companies in the whole wide world.
  - nitrogen 16y ago
    AIUI Walmart is successful because they mastered logistics.
    - uxp 16y ago
      Which is a key point, and probably the one wensing was originally trying to make. If you can build a business with the intent of doing something like logistics extremely well (which lowers your costs) then you can pass that on to the consumer of your products. They don't give a rats ass about your logistics, but they do care that whatever the blackbox your warehouse does ends up shaving 20 cents off that bag of chips. WalMart still gets about the same percentage of profit, but the overall cost of the product is less. Lowering your price just to be cheaper than your competitors only cheapens the market and doesn't add anything of value to the product. You will quickly learn why everyone else keeps their margin up higher than yours when you can't expand due to lack of funds, or you have to cut something else out to keep in business.
    - Goladus 16y ago
      True, but the result is low prices and that's what they market. The other big advantage is that they are ubiquitous. Outside of major cities, Walmarts are everywhere.
  - OstiaAntica 16y ago
    You should learn more about Wal-Mart. It is, profoundly, a technology company. Wal-Mart was one of the earliest adopters of satellite communications in the 1970s and are leading the RFID revolution today. They have used logistics technology to ramp up to heretofore unknown scale, and use that scale to batter their suppliers down on price.
6ren 16y ago
Yes, price is an enabler, that enables you to get started. The key is you don't have to be very good in other respects at first, and yet customers will be delighted, if their other option is nothing (e.g. because of price). Over time, you can improve at what your customers value, and usually you'll find things your particular customers especially value, and that your position serendipitously helps you do better. Improving market/product match over time. That's marketing, in the sense of targeting need; I agree it might not be the best marketing in the sense of advertising! Yet... it still does depend on the segment you target: for some, low price is what they want to hear. I like your example of using the money saved from a low cost business model to improve something else. But to compare Zappos with a retail store: there's no shipping cost for a store; overnight is slower than today (or now); and buying-without-trying remains less reliable than in-store purchase. I would guess being cheaper is the highest ranked attribute for most of their customers - if it was the same price as retail (or higher!), how many would still buy?
- wensing 16y ago
  I think your reasoning fails the real world test. Reasons Zappos' target customers use Zappos: vast selection, easy returns, no hauling your kids to the mall (this is HUGE), excellent customer service. I'd guess they could charge 5-10% above retail and still win.
  - 6ren 16y ago
    I haven't actually used Zappos, but if you're saying a website has better customer service than an actual person, maybe I should. Unfortunately they don't ship overseas.

by wensing 16y ago

feral 16y ago

Counter-example: Ryanair is a hugely successful airline business in Europe. Its advertising and marketing strategy is about low price above all else, and unashamedly so. Look at their garish and ugly website: http://www.ryanair.com/en http://www.ryanair.com/en Count how many times they use the word 'cheap'. Read the wikipedia article, which mentions how badly they treat customers, and their rapid growth and financial success: http://en.wikipedia.org/wiki/Ryanair http://en.wikipedia.org/wiki/Ryanair Sometimes low-cost, sold as low-cost, works well.

ssp 16y ago
Ryanair has taken the low-price aspect to an extreme too. For the flights I care about, it's generally something like £5, but once in a while it's literally £0 plus airport fees. I have never been treated particularly badly by them. You don't get anything that might be included in a more expensive flight such as checked bags, a meal, assigned seating, etc., but I don't really care about those things anyway, certainly not for 1-3 hour flights within Europe.
- riffraff 16y ago
  Ryanair also mastered price making. Prices vary in a way that is almost scaring from day to day, if you try to get a last minute flight you may end up with a hundreds of euros or half penny depending on their expected load, while traditional companies are way more rigid.
cookiecaper 16y ago
See also WAL-MART. Wal-Mart doesn't purport to do anything better than its competitors really, and I don't know how they could; they all sell the same things, and so price is the only real competition (environment counts too, but it's a tertiary point). Wal-Mart is now one of the biggest companies in the whole wide world.
- nitrogen 16y ago
  AIUI Walmart is successful because they mastered logistics.
  - uxp 16y ago
    Which is a key point, and probably the one wensing was originally trying to make. If you can build a business with the intent of doing something like logistics extremely well (which lowers your costs) then you can pass that on to the consumer of your products. They don't give a rats ass about your logistics, but they do care that whatever the blackbox your warehouse does ends up shaving 20 cents off that bag of chips. WalMart still gets about the same percentage of profit, but the overall cost of the product is less. Lowering your price just to be cheaper than your competitors only cheapens the market and doesn't add anything of value to the product. You will quickly learn why everyone else keeps their margin up higher than yours when you can't expand due to lack of funds, or you have to cut something else out to keep in business.
  - Goladus 16y ago
    True, but the result is low prices and that's what they market. The other big advantage is that they are ubiquitous. Outside of major cities, Walmarts are everywhere.
- OstiaAntica 16y ago
  You should learn more about Wal-Mart. It is, profoundly, a technology company. Wal-Mart was one of the earliest adopters of satellite communications in the 1970s and are leading the RFID revolution today. They have used logistics technology to ramp up to heretofore unknown scale, and use that scale to batter their suppliers down on price.

6ren 16y ago

Yes, price is an enabler, that enables you to get started. The key is you don't have to be very good in other respects at first, and yet customers will be delighted, if their other option is nothing (e.g. because of price). Over time, you can improve at what your customers value, and usually you'll find things your particular customers especially value, and that your position serendipitously helps you do better. Improving market/product match over time. That's marketing, in the sense of targeting need; I agree it might not be the best marketing in the sense of advertising! Yet... it still does depend on the segment you target: for some, low price is what they want to hear. I like your example of using the money saved from a low cost business model to improve something else. But to compare Zappos with a retail store: there's no shipping cost for a store; overnight is slower than today (or now); and buying-without-trying remains less reliable than in-store purchase. I would guess being cheaper is the highest ranked attribute for most of their customers - if it was the same price as retail (or higher!), how many would still buy?

wensing 16y ago
I think your reasoning fails the real world test. Reasons Zappos' target customers use Zappos: vast selection, easy returns, no hauling your kids to the mall (this is HUGE), excellent customer service. I'd guess they could charge 5-10% above retail and still win.
- 6ren 16y ago
  I haven't actually used Zappos, but if you're saying a website has better customer service than an actual person, maybe I should. Unfortunately they don't ship overseas.