What Is Your Value?

By: Joseph V. Marigliano I was reading an article the other day about rethinking manufacturing strategy versus a low cost country sourcing strategy. My expectation was the article will be a debate between devoting the best talent to manufacturing processes or applying that talent to low cost manufacturing in some remote part the world. But that wasn’t the issue, in the end the points and counter-points all came down to one important question: “What is your value?"

As a strategic pricing consultant one of the first things we help our clients understand is that discounting and low price strategies are (1) seldom sustainable and (2) lacking in true differentiation. Stated a different way, cutting your price to get an order opportunistically can make sense. Cutting your prices strategically (systematically), unless you’re the low cost producing and grabbing market share, does not.

Chasing labor rates around the world can provide some well-needed cost relief and improve margins. It is a practice manufacturers have used for decades. However, delivering lower prices consistently raises customer price sensitivities and brands the manufacturer as a low-cost provider. Is that really what you want?

In the end, competitive advantage is no longer based on reselling low cost country items because everyone is doing the same thing, which means there is no differentiation. One way to avoid this trap is to explore your overall value and then manage price based on value, not cost.
Here are some key questions to ask yourself and areas to explore if you want to define your value beyond the limiting attribute of price.

What is the basis of our competitive advantage(s):
•Total cost of ownership
•Improved end customer operational performance
•Improving end customer competitiveness, solving problems for our customer’s customer
•Lowest cost (if it truly applies)
•Customer business process optimization
How will you compete or add differentiating value:
•Consulting and advisory services
•Technical services
•Process integration to drive speed
•Solution provider
•Part of team/inner circle.

These questions can begin to focus your thoughts and drive decisions and action. Above all, remember that the customer chooses you because they believe you can provide a business outcome that is superior in cost/benefits to your competition.

Author Info

Joseph Marigliano is a very well known author, who writes on topic related to process management consulting, marketing consulting services, project management consulting experts and other consulting services.