| COMPARE |
The Myth |
The Truth |
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Being competitive means cutting costs. |
Being competitive means improving quality. |
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Objective |
To attract more customers by lowering prices. |
To attract more customers by improving quality. |
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Method |
Delivering "one size fits all" products and services, with the bare minimum support needed to get the customer to buy. Focus is on the one-off sale. Deals are cinched with low sticker price. |
Delivering customized products and services, with as much support as is feasible. Focus is on developing customer loyalty. The spotlight on quality attracts ready buyers. |
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Inputs & Outputs |
The cheapest available materiel, equipment and labour are used. Outputs have few features. Customers receive low level service and minimal support. |
The best reasonable materiel, equipment and labour are used. Outputs have many features. Customers receive enhanced service and extended support. |
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Result for Internal Systems |
The high volume strategy puts greater stress on equipment and personnel, while there is less reinvestment money for maintenance or pay raises. |
The low volume, high value added strategy earns a premium price, while equipment is used less and better maintained. Employees receive greater rewards for more challenging work. |
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Competitive Outcome |
This company comes into direct competition with lower-cost producers who are also competing in terms of price. |
This company raises the level of competition, on its way to becoming the best in the world. Others play "catch-up". |
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Market Outcome |
Customers who buy according to price are never brand-loyal. Customer base erodes as competitors offer even cheaper products and services. |
Customers who buy according to quality are very loyal. Customer base grows as reputation for excellence spreads. |
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