Best Value Strategy

The strategy is focused on providing customers with more customer value for the same money. The goal is to offer the consumer a product of high consumer value that meets his expectations for the main consumer properties and exceeds his expectations in price (based on the price that competitors request for a product with similar characteristics). Optimal costs can be achieved by giving your products attractive consumer properties at a lower level of costs than those of competitors. To do this, the company must have the resources and capabilities to ensure the same quality as competitors, but with lower costs, the same service, only cheaper, the same properties of the product, only prices are lower, etc. For the successful implementation of the optimal cost strategy, it is necessary to be able to simultaneously reduce costs and introduce additional characteristics into the product.

Thus, the producer with optimal costs seeks to simultaneously achieve advantages both in terms of costs and through the differentiation of goods, and combines the struggle to increase market share with the struggle to capture a certain market segment. The most successful competitive approach here is hybrid: achieving optimally low costs combined with limited differentiation. The target audience is made up of price-sensitive buyers, which are usually many in the market. The competitive advantage lies in the high quality of the product at costs lower than those of competitors.

The optimal cost strategy ensures success in the presence of certain market conditions. In markets where buyers are accustomed to high product differentiation but are price sensitive, the optimal cost strategy is more effective than the cost leadership strategy or the pure differentiation strategy. Usually, buyers prefer middle-class goods to cheap standard analogues, which are offered by cost leaders, and expensive analogues with high differentiation. But if a company does not have the resources and capabilities to produce above-average quality products at costs lower than those of competitors, then the optimal cost strategy does not suit it [15 p.184].

The disadvantages of an optimal cost strategy are that there is a risk of being squeezed between companies seeking cost leadership and companies pursuing a product differentiation policy. Industry leaders in terms of costs can displace the company from the segment of price-sensitive buyers. Manufacturers of high-quality products with high differentiation will try to oust it from the segment of buyers who value quality and individual design. Thus, in order for the optimal cost strategy to be successful, the company must offer a product that sufficiently exceeds the consumer properties of competitors’ products to justify a slightly higher price compared to the prices of cost-leading companies. At the same time, the company must achieve a significantly lower level of costs compared to manufacturers of highly differentiated goods while maintaining their consumer properties.