Counter-example:

Ryanair is a hugely successful airline business in Europe.

Its advertising and marketing strategy is about low price above all else, and unashamedly so.

Look at their garish and ugly website: http://www.ryanair.com/en Count how many times they use the word 'cheap'.

Read the wikipedia article, which mentions how badly they treat customers, and their rapid growth and financial success: http://en.wikipedia.org/wiki/Ryanair

Sometimes low-cost, sold as low-cost, works well.

Yes, price is an enabler, that enables you to get started. The key is you don't have to be very good in other respects at first, and yet customers will be delighted, if their other option is nothing (e.g. because of price). Over time, you can improve at what your customers value, and usually you'll find things your particular customers especially value, and that your position serendipitously helps you do better. Improving market/product match over time.

That's marketing, in the sense of targeting need; I agree it might not be the best marketing in the sense of advertising! Yet... it still does depend on the segment you target: for some, low price is what they want to hear.

I like your example of using the money saved from a low cost business model to improve something else. But to compare Zappos with a retail store: there's no shipping cost for a store; overnight is slower than today (or now); and buying-without-trying remains less reliable than in-store purchase. I would guess being cheaper is the highest ranked attribute for most of their customers - if it was the same price as retail (or higher!), how many would still buy?