The last post highlighted an HBR article that mentioned that for companies which wanted to become truly great – to grow and sustain over long periods of time – it was essential to focus on revenues first and costs second. The same article mentions another key factor underlying the greatness of companies: focus on “better before cheaper.”
Better before cheaper means these companies concentrate their energies on coming up with a good product and selling it to their customers much more than they focus on coming up with a cheap product. Yes, there could be market situations where a cheaper product sells much more than a slightly pricier one. But if the price advantage comes at the expense of product quality, then it is unlikely to provide sustained benefits.
One of the classic examples that comes to mind is that of Apple which charges a premium for its products, and, despite this, has cultivated a herd of followers! Had Apple focused on lowering its costs or coming up with cheap products, it would have been just another brand, fading into the background as soon as it came into the limelight.
A possible example for the other extreme could be the Mahindra Stallio where product quality suffered when the company tried to focus on lowering costs. Despite good marketing (see a clutter-breaking TVC here featuring movie actor Aamir Khan) the product had to be withdrawn from the market. Mahindra is, nevertheless, back with a new bike, the Centuro, and it remains to be seen where this product is headed.
Related links:
Marketing, Real and Ideal 