Just because the market you want to enter is crowded with competitors doesn't mean you can't succeed. Use these tips to succeed in a saturated market.
Saturation means strong market with fierce competition, Seena Sharp, founder and managing director of Sharp Market Intelligence points out that a saturated industry is a sign that there’s a lot of opportunity in the market. If entrepreneurs avoided entering markets that are already served by other businesses, consumers would have far less options.
Before entering a saturated market, one most evaluate the realistic profit and revenue opportunities, taking shrinking profit margins, fast-paced innovation and flow of information which might limit business potential in the short and mid-term future.
New players on a saturated market should only enter with significant on-stage and backstage advantages - being more cost effective in both production, distribution and marketing aspects compared to the existing competitive set.
Serving a specific subset of the target audience
Consumers today choose from more than 600 vehicle models—but in the 1950s, there were only about 65. Likewise, there’s not an overwhelming need for more restaurants, yet new dining venues are emerging every day, Sharp notes. It’s possible for any company to succeed in even the most competitive industries by creating a product or delivering a service that’s distinctly different or better than what’s available—or by catering to a specific subset of the target audience.
Start with change and innovation
The key to success in a saturated market, according to is change. “Change is a synonym for opportunity. If you don't know what's changing—with your customers, competitors, distribution channels, alternative uses, features and more, your customers will buy from those who do,” she says. And that’s precisely where new businesses have an edge.
Established companies are typically over-invested in their current procedures, technology and business model and will find it difficult to change. New companies have a significant advantage here - being able to design their business processes and business model for the future.
New companies also have the advantage to create their brand and marketing communication recklessly in line with their target audience. Established companies, again, will find it more difficult to adjust their branding or to rebrand entirely - as they have a lot to lose.
“New companies often recognize the gaps that established businesses don't. If they're correct, they gain customers and grow,” Sharp says. “The challenge is not to become like the established businesses who think they know better than the customer. This applies to B2C, B2B and nonprofits.” Larger companies that have been in business for decades are sometimes set in their standards, and it’s more complicated to modify long-standing practices. Small businesses with less rigidity and a smaller organizational hierarchy can often make quick decisions and turn on a dime.
Focus on value added services
In any entrepreneurship course, you’ll be advised to choose a business model and figure out how to do it differently or better than existing companies. In some cases, though, you might already be in business and experience a sudden boom in competition.
That was the case for Kyle Willis, CEO of No to the Quo.
“I started my social media consulting company three years ago when Facebook advertising was just kicking off and businesses were finally utilizing social media as a viable marketing channel,” Willis says. “Social media managers came out of the woodwork and everyone called himself a social media expert.”
Even though he had previously served as a national account manager for a social network, Willis needed a competitive advantage. So he offered low-entry, no-commitment contracts to clients who wanted to see if social media was a viable marketing tactic for their companies. “If clients weren't happy with my work or they didn't receive what they expected, then they weren't locked into any long-term contract and could cancel immediately.”
It was an incentive for clients to try No to the Quo over other social media consulting agencies that required long-term commitments. “This required me to constantly be delivering great results and make sure that I exceeded their expectations,” Willis says. Once clients experienced success with No to the Quo, Willis earned their business over his competitors.
Embrace differentiation in branding
If you’re really good at keeping your finger on the pulse of the industry and the waves of change, that often sets you apart from the competition. Small businesses that differentiate themselves are able to thrive in the most competitive environments.
“My advice is to do your homework, define what makes you different and embrace that difference wholeheartedly,” says Bob Myhal, CEO of NextHire. “My company, NextHire, is part of the competitive outsourced recruiting niche, yet we've been able to gain a lot of attention and traction by reinventing recruiting for the digital age and offering a disruptive flat-fee model.” NextHire allows busy executives to hand off the hassles of hiring for a flat fee, saving them both time and money in the long run while allowing them to find better talent.
No matter how crowded your industry, even if it's full of major brands, you can achieve success by setting yourself apart. Whether that means reinventing industry standards, taking a new approach to the business model or offering something customers can’t refuse, carving a niche in the most saturated market is possible with commitment and creativity.