Successful Companies: Only Three Rules Needed?
Anneke Zwart, Student (University), Netherlands, Moderator
Raynor and Ahmed did a statistical study of a large amount of companies and discovered that just 3 seemingly easy rules are consistent with successful companies and their strategic choices:
1. Better Before Cheaper. Companies can choose either a way of attracting customers with relatively lower prices; or companies could focus on non-price advantages such as design, superior branding, exceptional functionality, sustainability or convenience. Keeping in mind that an organization cannot afford to ignore the price position and vice versa, in most cases the latter choice causes exceptional performance. And if the competitive environment changes, one can always choose to reduce the price at that moment and still follow the rules established.
Nevertheless, focusing on the non-price features by companies goes together with challenges. First, there is an everlasting battle between rivals that have figured out each others’ formula and find improved formulas for success. A...