Two Types of Businesses

There are two types of businesses: 1) cost driven and 2) value driven. But almost all businesses crave both.

A customer doesn’t walk into a Whole Foods expecting to save a lot of money; they’re value-driven. They walk-in with a desire to have a premium grocery shopping experience and to shop for the highest quality ingredients. Similarly, a customer who shops at Wal-Mart for groceries is much more price sensitive and likely makes their decisions based on cost; albeit they still want the highest quality product under their price goal.

This decision calculus essentially applies to all businesses. From car shopping to vacationing; from home buying to professional services; from enterprise software to internet providers.

So, if you’re running a startup or are a small business owner, it’s critical that you put your customer in the middle and build around them. You cannot be everything for everyone; certainly not in the early stages. Knowing who you’re building for will reduce friction around the problems you’re solving.

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