Complete Guide to Focused Low-cost Strategy

4 years ago

This is a strategy where businesses selling similar products in a given niche lower their prices in order to increase revenue and gain a competitive advantage.

What is a Focused Low-cost Strategy?

When businesses try to compete with the bigger brands in their niches by keeping prices high, they fail to win the hearts of millions of consumers who at some point all want the cheapest products.

After a certain time you’ll need to understand that a high price tag will eventually lose you market share.

Instead of letting that happen to you, you can use a focused low-cost strategy to protect yourself from the bigger names in your niche.

What is it’s purpose?

Low-cost businesses enjoy far greater market shares in their niches. They squash the competition and the trust of their customers grows making them confident they won’t have to worry about a competitor for long.

Your main focus should be making sure your customers don’t have to worry about your competitors constantly.

A low-cost strategy builds up trust between you and your customers. Trust you can use to get them to come back to you without having to worry about a price increase over a short period of time.

By using a focused low-cost strategy you will be able to keep your prices low for the foreseeable future.

What are the main steps to follow?

Step 1: Marketing

Your focus should be on a variety of marketing channels. The main ones are:

  • Internet marketing
  • Offline marketing (either offline or online)
  • Local marketing (either offline or online)

Step 2: Sales

The sales process for your business is simple.

Sales > Sales Converting Traffic > Sales

This is the process you need to follow in order to make sales and get revenue from your potential customers.

Identify those areas in which you can save a significant amount of cash and then use those savings to make things easier for you to generate sales. When you can gain more sales without increasing your costs, your business will grow rapidly.

There are three main areas you should focus on when trying to generate more sales:

  • Digital media: websites and ads.
  • Offline media: newspapers, magazines, radio, TV, etc.
  • Direct marketing: business cards, brochures, etc.

Step 3: Pricing

By now it should be crystal clear to you how important it is to price your products in a way that will make your business fail. Don’t be afraid to use the media against your business.

Use campaigns related to products with high prices and promote your business offering low prices on the same or similar products. Push the idea to your customers that low prices really mean value for money.

Talk to newspapers and magazines to run articles on how low prices mean incredible value far exceeding what you’re paying. Talk to radio and TV stations to get them to promote your business to the world. The main idea is to push the idea that low prices are awesome.

If you want to protect your business from competitors in the long term, you need to push the message across to your target audience that low prices are totally worth it.

Step 4: Long-Term

Make sure you cover your expenses and leave room for growth but be as cheap as possible.

If you don’t have any competitors you won’t have to worry about losing your customers to them, only the big brands in your niche can give you any problems in the long run. You should remember that the real cost of your products isn’t their actual price but in the overhead of every step of your supply chain, so keep a close eye on these costs.

Make sure your business isn’t going down that road of investments in expensive machinery and product development. If you can’t find a way to produce your products cheaply, you need to find a new product that you can produce at a low cost.

Focused Low-cost Strategy  helps you protect your business from competitors, maximizes your profits and eliminates the need for expensive machines and expensive product development.

It’s all about focusing on the supply chain and cross-functional teams that work together in order to maximize profits while reducing cost.

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