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Know your customers

The cost leaders today generally miss out on one important aspect. They typically concentrate on delivering a product of competitive quality at the lowest cost and pass on part of the savings to customers. They are so obsessed with costs and pricing that rarely do they dissect the customer value proposition. This is a prospective area that may provide yet another cost reduction opportunity and at the same time attract potential customers from a niche segment. A company when it compares the value proposition that it offers against the attributes that customers really value, new insights and opportunities may open up. Such a study may reveal some factors on which the company may be incurring substantial expenditure and yet the customers do not care about the particular feature or facility. Cutting on such frills may help in improving the bottom line. But cuts on frills accompanied by thrust on factors where company's offering is below the customers' expectations provides an excellent opportunity for cost cutting and serving enhanced value to the customers, which may draw customers