We seldom invent something entirely new and unprecedented when it comes to business models. Much of what we do as entrepreneurs or change-makers are simply derivatives, refinements, or shameless imitations of existing business models. In fact, we're constantly entering markets that already have fierce competitors fighting over market share.
Diving into a market to take share from current market leaders is a Herculean task and few succeed. The typical way to grab market share is to lower prices but that only sparks a price war where everyone loses, except maybe the customer. Even that is debatable as low prices and razor-thin margins limit a companies' ability to deliver great customer service.
What is an entrepreneurial marketer to do? You have to create new market share by expanding the pie. How do you do this? You likely will not invent a new business model. You aren't going to create a competing product that is cheaper and higher quality; that's magic and real magic happens rarely. You tell a new story and create a new product to match that story. When you succeed in artfully crafting a new story, the product doesn't even have to be qualitatively different than what already exists in the market. The Porsche Cayenne is practically the same car as the Volkswagen Taureg.
When you tell a compelling new story, you attract new people into the market and make the pie bigger. Most of us thought skydivers were just crazy people with a death wish. Then somebody succeeded in telling a story of skydiving as self-help, as a way to discover yourself. Now, many more of us have skydived at least once.
When you tell a compelling new story, you attract new people into the market and make the pie bigger. Most of us thought skydivers were just crazy people with a death wish. Then somebody succeeded in telling a story of skydiving as self-help, as a way to discover yourself. Now, many more of us have skydived at least once.
"When you succeed in artfully crafting a new story, the product doesn't even have to be qualitatively different than what already exists in the market." How can Hollister charge $30 for a polo shirt and Walmart sell a nearly identical shirt for $11? Hollister creates an environment and sells a story. Entering their shop compared with Walmart is another world. The $19 dollar difference is perhaps $3 dollars in fabric/materials and $16 as the cost of becoming a cast member in the story.
Posted by: Joseph Sherman | 02/19/2009 at 12:10 AM