There are many marketing strategies that you could adopt, as you fight in a competitive market. You could choose to be a premium player, charge above-average prices for the value that you deliver and be a status symbol; or you could choose to appeal to a select group of consumers, not compete with the big guys and be a niche player; or, you could have the ability to produce goods at bargain rates, play on your economies of scale, go low on frills, stick to the very basic product and compete on price, becoming a low-price, value-for-money producer.

Competing on price is something that has been tried across industries – and is a strategy that has often been successfully executed as well. There are price leaders in every other industry and consumers would love to get their products and services at bargain rates. If you are strategically positioned to give the best value for money and if you could manage your internal profitability with razor-thin margins or by controlling costs to have decent margins despite your low prices, you should arguably be the price leader in your industry.

However, being a price-leader is not the same as being the market leader in an industry. Price is definitely one of the key inputs into the consumer decision process and a product that competes on price is more likely to make the consumer give it more than a cursory thought. But then, the price proposition has to be projected to the consumer in such a way that the consumer values the offer that he has been made.

The mistake that companies do is to completely negate any value that the consumer may be looking for, given the price proposition that companies assume the consumer would love. To the contrary, price is definitely not the only factor that would tilt the consumer’s attitude in favour of your brand. It is important that the consumer is made to feel special when he gets the product. An attitude that takes the consumer for granted, just because the consumer had chosen to buy a product on price, would not make the consumer stick on with the product for the long term.

Ultimately, the consumer has to love the product that he buys – not just the price that he pays. The price leaders in industries have lost the race because they focussed much on price and less on the consumer.