How to Capture the Market Your Competitors Aren't Serving
In most industries, competing businesses typically compete with each other in the same ways, according to the same rules, with nearly the same products and services – and to the same exact customers.
When a marketplace becomes crowded and a company wants to stand out in order take business away from the competition, they normally have two choices: They can choose to compete on price – or they can customize their service somehow.
Neither of these is an ideal option in the "new marketplace" and I'll tell you why:
When you compete on price in today’s marketplace, you’re shooting yourself in the foot. For a couple of reasons. The first being, if you are a small business selling a product or service, it’s very difficult for you to compete with larger or more established businesses based on price. The second (and more important) reason is because when you focus your sales efforts based primarily on price in today’s market, you are creating a one-time customer.
That’s right. When you obtain customers solely because you are hitting a price point, you are winning a battle – not a war. You have made one sale to someone who believes that price is the only factor in choosing a product or service – and by playing the price game you have in effect just told them that they are right.
This means that the next time they need a similar product or service, they will shop the same way. They will check with anyone and everyone – and if someone is $5 less than you, guess what? They’re gone.
When this scenario plays out, competitors go back and forth chipping away at their profit margins until the contested sale is hardly worth winning.
Wouldn’t you rather spend your time and energy obtaining customers for life? Partners? True fans of your business?
The other school of thought is to customize your offering to an existing segment of your traditional market. When a marketplace gets ultra-competitive and crowded, companies usually hunker down and focus on their traditional demographic group of customers, targets, and prospects. They dissect the differences between those customers – and then customize their product or service to appeal to those differences.
Consider though that as you customize, you’re dealing with a smaller and smaller group of people. Depending on the size of your market, what winds up happening in this situation is that the business eventually customizes and segments their market down to a size that can no longer sustain them.
A Better Strategy: Create Your own Market
Instead of playing the pricing game or choosing to customize products or services to the same traditional group of people based on their different qualities, I would propose a totally different strategy.
An opposite one, in fact.
Market to customers who don’t exist yet and market to what they have in common – not to what is different about them.
Let’s look at a couple of examples using two totally different types of businesses.
A Personal Trainer:
Target people who don’t already belong to a gym.
Who doesn’t already belong to a gym?
How can you find them?
Why don’t they already belong to a gym?
Can you offer something of value to someone who finds big gyms snooty and uncomfortable?
Can you think of a solution for someone who can’t physically get away to a gym?
Why try to lure existing gym-goers when you can create them?
A Company That Builds and Sells Computers:
Some people still don’t own one. Yes, they exist. Lots of them.
Who are they and how can you engage them?
Maybe they think computers are too hard to use – or they just don’t understand what practical use they would have for one.
Could you make computers less intimidating for them? How?
Would they be more inclined to own one if someone showed them how easy computers can be – or how easy a computer can make it to keep in touch with loved ones?
Why spend your time chasing existing computer users when you can create them?
So while you would still be competing in your same industry, you will have effectively created your own less busy, less competitive market space full of people who aren’t already engaged with several of your competitors.
When you create this scenario, you no longer have to worry about what the competition is doing – you just have to sell well.
Am I talking about a niche? I suppose you could call it that, but I’m really talking about creating a niche… not exploiting an existing one.
Think about what you do.
Who isn’t using the product or service you offer – but should be?
What are the common reasons why they aren’t using it?
How can you find these people?
How can you help them see that your offering would be good for them?
Share your thoughts with me below. Who is your industry not currently serving?