How to Profit in a Highly Competitive Market ?
How to generate profits in a highly competitive market ? Well, the answer is simple DON’T COMPETE.
Competition implies consuming time, effort , resources , value diminishing and decreasing profit margins.So, do you still want to compete ???
Ok then let’s face it ! why you want to compete ?is it because you are pursuing larger market share and thus increasing your profits. Or is it also about dominating the market so you can impose your own prices.
What really happens most of the time when you compete is that you get to increase your cost structure trying to serve more or saturate the market or serve the current customers better ….And then you will try to create those desperate market offers or discounts or differentiate your service or product .
Let’s say you dominated the market and you achieved the largest market share possible. BUT, does that mean you are a winner? maybe yes , but for how long? especially in our extremely dynamic era with its surprising trends??? What is dominating today may be swiped away with with a new trend or new invention.
I think you need also to ask yourself that if I had the largest market share would that mean or guarantee higher profits than everyone else?
Actually, there is a false understanding that the larger the market share the more profits you gain!!!
The truth is the more you are niche-focused the more the profits you earn. Let’s take an example from the auto industry; Toyota globally have a higher market share than Bentley while Bentley generates more profits than Toyota.
Another example from the hospitality industry four and five stars hotels exist everywhere much more than luxury resorts like the ones in Maldives or in Santorini , but still the luxury resorts make more profits, they are even less likely to suffer from seasonal variations.
Another example from the aviation and airlines industry there are airplanes that anybody can go for and there are private jets.
What does this tell us ? or What does niche focused mean? When you are Niche-Focused you will : 1-Earn more Profits and and have higher profit margin . 2-You will need to sell Less. 3- And your cost structure will be Lower .
But how can you be niche focused ? I will give you 4 Tips out of 12 to put you on the correct track to choose your niche; 1- Study the process that your targets experience with a certain product or service. like before using the product or service , then during using it and after using it. You will get to know a lot of gaps that competitors aren’t covering and that would be a great Niche opportunity to utilize. Like when you do your daily workout or when you read a book , or when you use your laptop or even use your toothpaste. Study the journey and tap the un-tapped needs . Look for Pain Points. 2- Explore what issues are prohibiting your targets from buying a certain product in your area of interest. Like why aren’t they using Paypal services as a payment gateway? 3-Ask Influencers ( could be a parent or buyer or a purchasing director or financial manager or a retailer or dealer …) what are the problems when buying a certain product or service, you will reveal a lot , you will get to know many pain points that are uncovered. 4- Think of people who might have an interest in common life aspects and would love to have and satisfy but can’t for different reasons. Like older people who would like to have a bachelor degree or a high education certificate in a certain field.
In addition to those 4 tips please keep in mind these extremely valuable directives :
1- Do not pursue incremental improvements because they will not distinguish you nor you will be providing a real value to your targets but you are only pursuing contemporary gain . 2- Do not benchmark your service or product with industry key players or major competitors because you will limit your thinking of finding your creative targeted niche. 3- Do not Pursue price competition because you will decrease your profit margin and increase your costs.
Please understand that competition is against business solid successful continuity , because you will be draining your resources , efforts, money , time and the most of all you are swimming far away from what customers value .
If you want to master tactics and mechanisms in achieving Niche-Based Businesses (Extremely Profitable Zone ) then please feel free to contact me via email: Dr.email@example.com or via Skype : Dr.Salam Amin .