Cheap is the last refuge for the marketer who can't figure out how to be better.

True, if you're a small player, it will cost you more to provide the same products that an Amazon or a Walmart provides as you do not have the economies of scale.

At the same time, if you cut corners in the quality of packaging or the time of delivery or the quality of the customer service in order to be cheaper than an Amazon or Walmart, people might buy from you for a while until they run into difficulties due to the corners you have cut and then go back to Amazon or Walmart after being burned by you.

Cheap prices ought to be a consequence of the scale you operate at or the superior technology or processes that you use. Cheap prices only works when all else remains the same, or if your products are so cheap that customers can justify the drop in quality.

Cutting costs is only a strategy if you can continue to remain the same on all other aspects, a.k.a the quality.

So what do you do when you don't have the scale or the technological or process advances that will help you cut costs? Then you compete on something else. Be more reliable, remarkable, trusted. Provide value to justify the higher cost.

Customers don't go to the lowest cost offering all the time. If that were the case, the lowest cost offering would be the only offering that survives over time. Instead, people go to the lowest cost offering that doesn't make them feel ripped off. They pay higher at a local market when there is a story attached to what they buy. They pay higher for an exclusive brand because that helps them be recognised as exclusive in their society.

People are always willing to pay more. They just don't want to be ripped off. So, offer them something valuable.

We create value not by offering as little as we can get away with, but by providing something that wasn't easily available before.