Best-cost provider strategies aim at giving customers more value for the money.
The objective is to deliver superior value to buyers by satisfying their expectations
on key quality/features/performance/service attributes and beating
their expectations on price (given what rivals are charging for much the same
attributes). A company achieves best-cost status from an ability to incorporate
attractive or upscale attributes at a lower cost than rivals. The attractive
attributes can take the form of appealing features, good-to-excellent product
performance or quality, or attractive customer service. When a company has
the resource strengths and competitive capabilities to incorporate these upscale
attributes into its product offering at a lower cost than rivals, it enjoys
best-cost status-it is the low-cost provider of an upscale product.
Being a best-cost provider is different from being a low-cost provider because the
additional upscale features entail additional costs (that a low-cost provider can avoid
by offering buyers a basic product with few frills). Best-cost
provider strategies stake out a middle ground between pursuing a low-cost advantage
and a differentiation advantage and between appealing to the broad market as a whole
and a narrow market niche. From a competitive positioning standpoint, best-cost strategies are thus a hybrid, balancing a strategic emphasis on low cost against a strategic emphasis on differentiation (upscale features delivered at a price that constitutes superior value).