I have some additional thoughts on my last post. Here is why the "pick any two" mentality is doomed.
Firstly, the main reason a company needs to deliver all three components of the Service – Price – Quality triad is this: You never can know which two the customer is choosing, if they are not really choosing all three. If you don’t deliver on all three, you automatically reduce your market.
Let’s say your company is delivering Service and Quality, but with a higher price. You automatically lose that part of the market that buys primarily on Price only, Price and Service, Price and Quality, or on Price – Service – Quality. This is going to be a large percentage of your available market.
When I was in sales and sales managment, the sales trainers of the day taught that there actually five decision criteria that customers use when deciding on a purchase. The first is the reputation of the vendor, the second is the level of trust they felt for the sales person, the third is whether the product fully fit the perceived need or desire, the fourth was the time frame of the purchase, and the fifth, and last, is whether the price is perceived to be a fair value.
The problem is this: In a world where competiton tends to drive everything to the level of a commodity, when all things appear to be equal, price is the deciding factor. Low price wins in a evenly competitive environment.