Lowest Total Cost - Real World Examples

Here are some examples of the Lowest Total Cost strategy from my previous post:

Dunkin Donuts (see an earlier post for a complete article outlining their business model). They compete by targeting a specific customer that is looking for good coffee at a low price, delivered fast and conveniently. Their operations are set up differently than other higher-end coffee shops.

Obviously, Wal-mart is an example as they excel at delivering speed, convenience, and low price rolled up in a no-frills shopping experience.

Ikea is another example. They deliver specific components of value such as low price, wide selection, and convenience. A customer can furnish their entire home in this store at a low price, late in the evening , and while putting their kids in the in-store child care facility.

A slightly older example but still a good one is Southwest Airlines. They deliver a no-frills, low-cost, and on-time travel experience.

All of these examples show the importance of differentiating by delivering specific components of value through a focused operating model. Each one focuses on performing internal activities that deliver the Lowest Total Cost value proposition to a chosen and specific customer group.