When businesses suffer from price competition and products and services become a commodity, niche businesses can thrive purely by differentiating and narrowly focusing on what they know best.
Price competition means your products or services have become a commodity.
This drives prices down and removes the loyalty and the relationship between a business and it’s customers.
It’s happening everywhere.
And you don’t want to be a part of it.
If you do, you’ll need deep pockets or you will go broke, as profitability goes out the window.
Price becomes everything. Keeping pace with your competitors becomes a game.
Improving yourself to mediocracy, as Youngme Moon, in her Book, Different, Escaping the Competitive Herd, suggests.
If that is happening to you right now, you need to do something about it. You will want to plan and envisage future possibilities.
If you are starting a business from scratch, it will be the same.
Watch Seth Godin in the Art of Marketing below, telling us about the mass market and how it is changing, with the mass in the middle of a distribution curve with the edges leaking – it is at the edges where the niches are, giving you the opportunity to differentiate your business.
A niche business looks to create product or services that are different, or smaller, but more profitable segments of the market. Difference and aiming to dominate that vertical. A business that others can only imitate, but never compete, and for the expert, where it is difficult to replace you.
It’s not always easy to do. It’s a brave person who wants to stands out from the crowd.
It has to be people focused. Enough to stop people in their tracks. To shock them with the unexpected.
Now craft that into a business that provides a service or product. It doesn’t matter if there are 10, 20 or 100 competitors. If your idea of competition is just to compete so you can keep up with the competition, then nothing will change. You just stay just like them and get the same results.
If your business is based on matching your competitors, or copying them, even benchmarking against them, change is just incremental. That’s what defines a commodity and just leaves price as the only value to compete with. Like any electrical item to day, it can bought from just about anywhere for the cheapest price online.
There’s no monopoly in a commodity. All you can do is either be the cheapest and try and sell lots more than your competitors.
Larger companies, seek to dominate the market. But to be a dominant player means to target around 40% of market share if they can. Then aggressively guard that position through cutting prices or out-advertising when their competitors try to build market share. In Australia think breakfast cereals – Kellogs , Uncle Toby’s (Nestle) and Sanitarium products. Their domination is being eroded by Home Brand products (mainly Aldi) and some premium breakfast cereal products. The premium cereal products don’t compete with the dominant brands but eat into their market share. They chose to compete differently and nibble away at the majors. There’s still a living to be made at the margins.
Choosing your customer group to target by narrowing your focus and then seeking to create a meaningful experience for them is your goal. It also means that you get better at working within that niche in order to understand that market better than anyone else.
From my online marketing experience I can guarantee you that it is easier to market a business online when it is focused on a narrow niche and then build up the content or media that connects with the audience ( or tribe ) looking for you. Website traffic just goes up and up.
Try to be everything, and you compete with everyone else and get lost in the crowd.
Narrow your focus, choose the customers you want, and work smart to connect with them and draw them to you. Creating something that customers want to talk about and want to chose you to help them.
It might mean doing less. If you engage your customers in a way they don’t expect, they will certainly recognise it when they see it.
By working with the customers you target, you become a better practitioner or specialist as you get to know their needs at a deeper level and are better known in that field, leading to more opportunities for work.
If you are already being hammered on price, then what are you going to lose? Start now.
Disclaimer. I’ve yet to see a website become an overnight sensation. It takes focus, hard work, attention, thinking, a budget and time to make this happen. Mind you if you have a $5million plus budget we could have a good go at it.