In this blog entry we will analyze the organizations’ success techniques
looking deep inside the ideas and the principles these companies have used to
become the mega-successes they are today. The common denominator, the major
piece of the puzzle of the domination method is PERSPECTIVE. That is the
business strategy that all of these companies have used.
They talk about low prices every day so that it is assumed in our minds
that Walmart is one of the cheapest shops out there. That is not true, though.
People know that Walmart doesn’t always have the cheapest prices, but that
concept has helped them so that they can offer better deals than the
competitors of their size.
If we compete for the lowest price ever, in the longer run, for small
businesses, we are almost always going to lose, because we are working on such
a small margin that, if somehow a competitor of ours manages to lower the cost
by even a fraction, we have lost. So, going for the cheapest cost ever does not
always work.
There is another reason why the lowest cost does not always work. It is
because in our mind it is considered “cheapy”. Let’s say,for example, if you buy
a T-shirt in Walmart, it is not perceived to be a good shirt, because Walmart
doesn’t carry good quality clothing, shoes and suits. But the brand perception
of associating a person with a brand in terms of clothing or shoes or those
kind of things it is not really perceived to be elite; it is considered
“cheapy”.
Let’s take another example: Apple.
Apple created their whole brand by charging premium pricing and when a
person has an Apple product, it is considered to be cool. When we use Apple
products we talk about them with pride. But we don’t always talk with pride for
something that has been bought from Walmart because it is considered to be
cheap.
It is all about the perception of how a person is perceived based on the
products he is associated with.
Are you associating with a phone that Apple offers or a phone bought
from Walmart? So the way you price your products matters.
If you are the lowest cost ever, you might attract a lot of people but
you will probably lose because, if your competitor lowers the price of the
product that is already the lowest for you, you are going to be working with
really small margins and on the other hand you are not going to have a
pretty good brand impression and association with people in terms of perception
of the quality.
On the other hand, if you are selling premium products like really
over-priced or high-priced products, they are perceived to be elite.
You can generate additional revenue from your brand name itself.
But there is a problem with charging elite prices. Only 5% of the people
are really super-rich. If your prices are really high, basically you are
eventually eliminating 95% of the population who cannot afford your products.
However, there is a solution and that is the PERSPECTIVE STRATEGY. What
is the perspective strategy? That was the strategy used by Apple and other success companies. What
the perspective strategy says is to position your product in such an angle that
it is perceived to be of higher value and people like to associate with your
product, service or brand.
Apple is basically in the PC industry but through their advertising and
marketing efforts, they engraved in the consumers minds that their computer are
not PC, they are Mac.
Basically a Mac is also a personal computer but they said “no, we are
not PC’s. This is something else, we are Mac.”
And they have created a high priced product. They have different colors.
Usually computers are black or gray in color, but Apple created white-colored
computers and they positioned it totally differently so that people say “ok,
this is a Mac and this is a PC” although they are all PC’s. Apple used this
strategy in Ipod’s as well.
It is known as the principle of the domination method and it
shaped the way Apple is running today.
Apple has repositioned the way people look at its products.
When people are talking about IPhones, they are not really comparing
prices because they are just talking IPhones to IPhones. They are just one.
Perspective strategy is the basis of the domination method: the way you
can dominate the market is by eliminating all the other competitors by changing
the perspective.
That is, when you create an IPhone, there is nothing like an IPhone. So
basically you have eliminated all your competitors.
In other words, you can reposition your business in order to create a
perception of elite-ness or something that people would like to associate with.
