Uniqueness as competitive advantage
Nik quit his day job as an accountant in a corporation to run a drinks stall in a Singapore hawkers centre. Selling ten glasses of herbal tea a minute at $1 per glass for 8 hours a day 6 days a week Nik earned much more than many white collar professionals. His stall was different because it offered a unique herbal tea blend reputed to have health benefits. It was based on a secret recipe handed down through the generations in his family.
A unique offering can make you stand out and dominate the market.
Exponential Value Increase
Nik used the finest ingredients to produce the finest quality herbal tea.
By setting up his business in a hawkers centre he was able to keep his operating expenses low. The location was easily assessable to a heavy flow of people from a nearby shopping centre and office complex.
Nik’s customers were also believers in the benefits of the drink. Through word of mouth they spread the news that resulted in a huge boost in sales. Nik has earned the nickname, “Herbal King” amongst his loyal fans who include local celebrities.
An electronic store operating literally from a hole in the wall store under a railway bridge in London, England was able to grow a huge following of repeat customers by offering the lowest possible price on electronic products in London.
Any customer not satisfied with a product could get an immediate replacement or refund of money. Here too business grew rapidly through word of mouth recommendations of satisfied loyal customers.
The electronic store was able to beat competitors by stocking electronic products that were one model behind the latest model. The electronic store would buy these brand new “older” models at huge discounts from warehouse clearance sales.
Lower Production Cost
Both Nik the “Herbal King” and the electronic store in London, England utilised similar strategies to grow rapidly. They kept operating expenses low and priced their offerings low enough so the widest segment of customers could afford not just to buy once but to become repeat customers.
This rapid growth in sales volume enabled both businesses to invest in automation to widen their distribution.
Nik the “Herbal King”, set up an automated production plant to produce his herbal teas which he sold wholesale to a network of hawker centre stalls throughout the city. Nik is now poised to export his herbal tea.
The electronic store set up a state of the art fully automated warehousing facility to deliver their electronic products to a network of small stores in cities across the country.
The above 3 strategies creates sustained market dominance which is a win-win for the business and consumers. Both Nik and the electronic store used the above 3 strategies to rapidly grow their respective businesses.
This is more effective then creating a monopoly which is a win-lose relationship where consumers become captive buyers through a monopoly sole supplier.
Many pharmaceutical companies have monopolies for specific drugs because they own patents for them. But once a patent runs out and generics enter the market prices drop rapidly. Market share can be lost in such circumstances and the pharmaceutical company will need to invest heavily in research for a new patent.
Market dominance with a secret recipe however, can last for a much longer time. Small businesses that want to achieve high growth rapidly should explore how best to adopt the above 3 strategies to create win-win situations for themselves and their customers.
International Business Consultant
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