Join 'em, fight 'em, or move away from 'em - Three approaches to beating low-price competitors at their own game

Martin Bishop

In the beginning there was Wal-Mart, built on the single-minded commitment to everyday low prices. By obsessively focusing on cost management, applying brutal pressure on its suppliers, and strictly adhering to founder Sam Walton’s words of advice, Wal-Mart succeeded in building a $345 billion empire.

Then came Southwest Airlines. Like Wal-Mart, Southwest was committed to low prices, but with a twist — a certain extra attitude and personality. A Southwest Airlines flight is cheap, yes, but also fun — even when you have to queue up in one of its A, B, or C lines for its first-come, first-seated flights.

And now there’s IKEA, Target, Trader Joe’s, JetBlue, and a host of other brands with new variations on a “value-plus” offer—value plus design, plus service, plus variety. Value-plus positioning has become a driving force in the marketplace and a real threat to companies that have held on to a mainstream positioning.