Final Customer Purchasing from the Product Producer

Use Steps: Use steps include all the customer's value added activities or the consumption of the product itself. These steps include all the costs the customer incurs in employing the product in its intended use.

Resources: Reduce resources required for the use of the product

Money: Reduce the money the customer uses with the product. For more ideas on using pricing, please see the Improve/Pricing section of StrategyStreet.

C. Reduce the customer's spending on other products used with the product

Warnings and advice

No. SIC Year Note
1 3500 2003 There are three ways that technology companies can escape the Cheap Revolution's unrelenting margin pressure. One is to improve product offering faster than anybody else can. This tactic generally works for market leaders with a good brand name, a greased distribution channel, and financial might. And it works only as long as the market wants added functionality and is willing to pay for it. A second strategy is to sell fast custom solutions that answer a customer's needs. IBM's trick for example has been to go modular and bring in an army of third party solution providers. The third tactic is to find an unserved market and serve it cheaply. The product or service should be so cheap that the industry's old guard believes there is no money to be made and walks away. Sony for example in the 1950s served teenagers with transistor radios. Their parents owned expensive tabletop vacuum to be radios from RCA or Philco. By serving the unserved Sony got a head start in consumer electronics.
2 3577 1998 No matter how cool the products, tech companies that don't stay on the cutting edge are doomed. For example, Silicon Graphics was hot in 1993 but lost out to cheaper microprocessors and inroads made by Microsoft's Window's NT.
3 4512 2000 Airline executives openly chided Delta Air Lines Inc. for initially ignoring ValueJet Inc. By not matching ValueJet's pricing and routes, Delta allowed the start-up to flourish, take its customers, and drive fares lower, until a Florida crash.
4 4813 2003 It is extremely difficult to take on well-established phone companies, even with new internet technology. A lot of internet-based calling systems have good features and cheap prices.

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