One of the most genuine dilemmas that companies are faced with is either to make product/services for which customers will be willing to pay a premium for, or to have a cost structure that will allow them to compete at a price that the competition will not be able to.

If we choose the former, we should make sure that the differentiation that we are offering to our customers is actually important and generates value for them and that is not founded on false assumptions of superiority.  Moreover, if we follow this path, we need to ensure that the features of our product/service are not easy to be copied from the competition.

If we choose the latter, we need to take into account that in reality, not many organisations can compete in such a manner, but is also true that if they do manage to do so, then it is difficult for others to imitate.  Furthermore, we need to remind ourselves that lowering our costs does not automatically mean that our cost is lower than our competitors and that in many markets there is usually only one lowest cost competitor.

In my view though, prior to deciding with regards to the above, there is one question that needs to be clearly answered: What is our Value Proposition?  The decision on which strategy to select must be based upon the profound understanding of each company’s value proposition and its΄ customer base expectations.  If this is clear, then the answer to the dilemma might be quite straightforward.  If not, it is almost impossible to reach to a wise decision.

Above all, strategy requires choice and clear communication throughout the organisation, especially with those that are in the “first line”, dealing directly with the customers.  Hence, we must be clear with our people towards which part of the business spectrum our company is competing.  Clarity will undoubtedly help salespeople to gain focus through qualification of prospects, customers and opportunities, and the whole company to overall allocate effort and resources with as minimum as possible waste.