Bruce Johnson continues to publish some truly useful marketing resources, and his latest post: Five Ways to Differentiate Your Business in a Crowded Market, provides much useful information.
The issue:? You are one of many players in the game. As Johnson wisely observes, a crowded market isn’t necessarily a bad thing — because there is a market!? The challenge is for our business to stand out from the crowd, and to do that (although he doesn’t say this) you need to create something called an “entrepreneurial monopoly” (or what I will abbreviate as EM).
An EM has some peculiar characteristics. It is difficult, if impossible, for competitors to replicate at least some key aspects of its uniqueness, and it offers real (or to play marketing to the hilt) powerful perceived advantages over the competition. For example, as Johnson suggests, a real advantage you might offer is speed of delivery, because you have the internal capacity and resources to respond quickly, regardless of market demand. If your competitors cannot easily set up a similar process, you have a genuine edge.
As long as your EM status holds, you can set prices at the level where clients are ready to pay your price, not the lowest price in a race to the bottom.
Of course it takes thought, resources, and usually a fair bit of established infrastructure to achieve EM status. And you can be knocked off your pedestal of someone comes up with a work-around. But while it lasts, you’ll be in a really good place.
In another take on the monopoly concept, I know of a (very) few situations where businesses have achieved genuine monopoly status, usually because of legislative/regulatory requirements and the entrenched capital/operating system costs that make it very difficult for competitors to break in. This could be because of trade/tariff barriers (for national markets), licensing and state/local regulations (some cities allow only “one” of certain classes of businesses in certain neighbourhoods) or, on a more legitimate basis, because you have a patent or copyright for truly valuable intellectual property.
Although of course it isn’t always possible and generally isn’t legal to set up genuine monopoly situations, if you can achieve the EM you’ll be well on your way to success.
Sometimes the opportunity is obvious. If it is, take it. If not, it is worth some strategic planning time to figure out how to improve your business operating moat when you enter or expand into new markets, or you are trying to preserve your existing place. Just be careful not to break the anti-trust or competition laws while you are thinking in these directions.