How can a company find its way out of a market characterized by pure competition?
Now, this is a great question. Short and to the point.
Pure competition is characterized for me this way. I am selling exactly the same items 100 other people are selling. Or maybe 1000 other people are selling or perhaps 10,000?
You can change pure competition in several ways and here’s how I do it. And you don’t need to leave your market totally. Just change some things and you’ll automatically change your market without ever leaving it.
- Change from new to used products
- Offer free something. Free Freight, 2 for 1 sales, financing, or anything that makes you different from everyone else out there. So if no finance to buy your product or service is out there, then figure a way to offer that.
- Nitch down. Or chunk down. Find a smaller nitch you can go to that makes your market change to another. You’ll still be in the same market, but in a different one by the nitch. For example do auctions. Auctions will elevate your lower price to the first position in eBay for example. If no one does auctions then you’ve now left the pure competition market.
- If you’re in the service business you can provide a free service to get the customer. Once they are in you can charge a higher fee. I don’t like changing good service people like my video editing guys. I want them to be happy in a very competitive market. There are thousands of video editors out there.
- My video editing guys found me. I use Fivrre and Upwork to get my video guys. These people found me on Instagram. Sent me a message and I tried them out. 30 videos later they are still going strong and I have no intention of changing them. They stayed in a pure competitive business but they made a small change and now they are out of it, but still in it. No one else has contacted me but for them.
- By changing how you find customers like the above, you’ve actually changed out of the pure competition. So you stay in the market with the pure competition but you’ve changed how you find customers. Are you still in the pure completion market? Or have you created a new market/business for yourself? Good question if you know the answer let me know.
- Pure competition business like the discount brokerage business changed overnight the day Robinhood offered zero commissions. Schwab went to zero then everyone else followed suit within hours. Now we are talking the purest of pure competition here. So how do they distinguish themselves and stay in the business? Better service, easier site to navigate. My brokerage, Interactive Brokers offers the lowest loan rates at less than 1%. This is a pure competition but make small changes to differentiate themselves from one another.
Finally, you can always leave the pure competition business, but you’ll find there is a lot of competition out there, no matter where you go. Not sure about the word “pure” here? So here’s’ my definition. The above brokerage of pure competition is defined by people selling the same service and a similar price. They all seem to be making money at it even though it’s pure.
They do differentiate themselves in this pure business by offering different services and marketing themselves in different ways.
If you don’t like these answers then you can always find a different business that isn’t pure. Let me know when you do?
Mike Addis Mega Shop – Maddiscash