In sports, people learn very quickly to play to their strengths. Playing your opponent’s game is very likely to lead to defeat. Unfortunately, this seems to be lost on some: some big name brick and mortar stores have been implementing price match policies that include prices from online retailers, while others have been attempting to prevent shoppers from “showrooming”.
Perhaps I’m missing something, but can you really engage in a price war with a competitor that has far less overhead? Likewise, when you’ve managed to get a potential buyer into your store, is that the time to inconvenience them? Storefronts have advantages like the ability to immediately take possession (no wait for the delivery truck) and the ability to inspect what you’re buying. While the customer may think price is everything, value is what they’re really after.
So what’s the IT angle here?
You aren’t going to win on price. Whether it’s software as a service, infrastructure as a service or offshore development, you cannot beat their price.
You can, however, win on value.
In “What do you do when you find yourself in quicksand?”, I covered a number of challenges facing corporate IT groups and some ways to address them. Some involved cutting costs (it’s not everything, but it’s still an important thing to eliminate unnecessary expense). However, the most important thing is to increase the level of value that’s being provided. More often than not, people will pay extra for value. It’s when they’ve been burnt that they get motivated to shop around.
As I observed on Twitter regarding the Business Model Innovation post:
.@tetradian @alexosterwalder @business_inno All else being equal, price is key…but how often is all else really equal?
— Gene Hughson (@GeneHughson) October 31, 2012
Form Follows Function 