Low Price as a Positioning Strategy: Not for the Long Haul

A recent article on the Advertising Age magazine web site discussed the difficulties discount marketers face maintaining a low price point of difference. Dell, Wal-Mart, and Southwest were held up as examples of how brands that are built on being the low price leader can find themselves struggling as market conditions and customer preferences change.

The point made in the article is on target; low price is a fragile long-term positioning strategy. Why? Your low prices may be accepted and liked by consumers initially, but after a while they become accustomed to paying low prices for your products and take for granted your low price position. Also, price is the easiest element of the marketing mix for a competitor to imitate. Price wars can commoditize a category or industry; no players win when that happens.

So, if low price is not a long-term marketing strategy, what role can it play for a business? I believe the progression goes something like this:

> Low price can attract customers to your brand
> Customers' perceptions of value offered influences repeat buying behavior
> Innovation drives loyalty and deep customer relationships

Don't be afraid of the word "innovation." It does not mean you must constantly be inventing new products. Innovation is any development that enhances the product or service in some wayand adds value for customers. Innovation can take the form of making the product easier to use, easier to store, easier to purchase, or any other way that makes users' lives better. Most importantly, innovation can drive the ability to charge price premiums for your products and services that add to your bottom line. Now that is a long-term strategy worth pursuing! Link

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