To What Degree Does Implementing Lean Help to Sell Products?
In the majority of cases, being low cost and offering fast deliveries doesn't provide a company with enough product differentiation to positively affect the sale of its products, especially if the company is not a major player in the market place. It's the major companies that have the advantage of being able to offer the lowest prices and the fastest deliveries that smaller companies usually can't match. Smaller companies trying to compete with larger companies on price and delivery usually find that to be very difficult to do, unless they happen to be serving niche markets. Also, starting price wars with larger companies is usually considered to be an unwise strategy, so how can companies compete?
Michael Dell stated in his 1999 book, "Direct From Dell", "When you've only got single-digit market share - and you're competing with the big boys, - you either differentiate or die". Therein lies the text book solution for most companies - compete by differentiating products and services from those offered by competitors and not by trying to offer the lowest market prices or the fastest deliveries. However, do offer your lowest prices and fastest deliveries to the extent possible by all means, but recognize that they may only get you in the customer's front door and may not necessarily result in a sale. Product differentiation however usually results in product sales.
Product differentiation is a marketing process that reveals the differences between competitive products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller as customers view those products as being unique or superior. Continuously differentiating products, which is a logical company strategy for long-term growth, can result in the development of sustainable competitive advantages for a company. Product differentiation is what sells products in the vast majority of cases, not low prices and fast delivery. Large corporations also realize that being low cost and fast to market when competing with other large corporations doesn't provide enough differentiation by themselves to generate sales.
Also, understand the role lean activities play in sales efforts. While lean can and should be used to reduce costs and shorten deliveries, it's not necessarily the key determining factor on whether sales will actually occur. Lean is necessary for the benefits it can provide but is not sufficient by itself in most cases to result in sales. To understand why, review Professor Terry Hill's discussion on how customers make purchasing decisions
Professor Hill of the London Business School indicated that customers make purchase decisions at two levels: a qualification level in which suppliers must first be qualified, on low prices and short lead times for example which are identified by Hill as order qualifiers, and at a winner level in which customers then select a wining supplier from the qualified ones using different selection criteria such as quality features, which Hill identifies as order winners.
Note that quality features don't refer strictly to defects. According to David Garvin in his 1988 book, "Managing Quality: The Strategic and Competitive Edge", product quality can be described in terms of seven features customers look for such as:
Performance -- primary operating characteristics
Reliability - probability of a malfunction or failure
Conformance - the degree established standards are met
Durability - a measure of product life
Serviceability - ease, speed, courtesy, and competence of repairs
Aesthetics - how a product looks, feels, sounds, smells, tastes...
Perceived Quality - a person's perception of quality