Low Cost Provider is a good business model but only if you have a significant competitive advantage in cost. Mature markets always compete on price until technology changes the game.
Better to compete on value. Solve a big problem in a big market. The iPod was not the first MP3 player. Nor did it enter the market as the cheapest. It cost $300 and in two years, it captured 92% market share. It wasn’t perfect. It didn’t have more features. It had three things:
- 1,000 songs in your pocket
- Easy interface
- You could buy your favorite songs for a dollar
But it had one big thing… it was cool!
People like cool. People paid for cool. A lot of people.
Read “Duct Tape Marketing” by John Jantsch