Competing On Price Is A Recipe For Disaster

 Competing On Price Is A Recipe For Disaster

By Matthew Pollard

Finding a niche market is a hot topic these days. Rather than trying to obtain mass market appeal with all possible customers, there is typically more success when an organization targets one, two, or several smaller niches.

Picking the right business niche or niches requires strategic thinking. Here are three steps an organization can take to determine the critical requirements, viability, and chances for success in each niche, increasing the likelihood of making the right choices.

The customer’s overall needs can be broken down into three sections: met needs, recognized unmet needs, and unrecognized unmet needs. A met need is a need that is currently being met by one or more products or services—a good example of this would be pizza delivery, which fills hunger and convenience needs. A recognized unmet need is something the customer is consciously aware of; they would appreciate any business or provider who met it. A good example of a company that achieved success filling a recognized unmet need is Pizza Hut, offering guaranteed delivery times to fill the recognized unmet need of reliable delivery. An unrecognized unmet need, on the other hand, is something a customer would really appreciate but does not yet know that they want. A good example of this would be Domino’s Pizza’s launch of online ordering, filling the unrecognized unmet need of an easier, streamlined ordering experience.

Unmet needs both recognized and unrecognized are the Holy Grail for business niches. Finding and meeting these unmet needs offers businesses a competitive advantage – the kind people tend to talk about with their friends and family. It also means businesses have little to no competition in their market space, since customers can’t just go somewhere else for the same product or service experience. In short, meeting unmet needs offers free advertising, credibility, and, as a result of the lack of competition, the ability to raise prices. Of course, the meeting of a recognized or unrecognized need can be copied by competitors, so it should be capitalized early on. Businesses should always be looking for an unmet need, and focus their attention on meeting needs that are not that easy to replicate, so there’s more time to capitalize on their advantage.

Which  Needs to Meet for the Best Advantage?

This is where the matching process comes in. The matching process is a simple, but effective analysis of the resources available versus those needed to meet all the potential unmet needs – while taking into account the potential upsides of each. Once completing the matching process, organizations can determine how well-placed they are to capitalize on each niche’s demands, in comparison to all others, then determine the right choice.

Step One – Determine the resource requirements. Look at each given unmet need (potential niche) and determine which resources, or what marketers call ‘key success factors,’ would be required to meet it. These could include a requirement for staff training, online infrastructure, equipment, insurance, joint ventures, partnerships, funding, and more. For example, a business may have to hire more staff or purchase new equipment and/or vehicles in order to offer a delivery time guarantee.

Step Two – Scoring potential niches. Once an organization has assessed the requirements for each potential niche, they should give themselves a score out of ten for their ability to obtain these key resources, factoring it the potential upside to success. In doing this, it is important for decision-makers to be honest with themselves: as a small pizza shop in the suburbs, it is unrealistic to expect to obtain ten million dollars in funding and go head-to-head with Domino’s next year. If the people involved in this exercise fail to remain impartial, it is useless. Organizations need to remember that they are trying to find an unmet need they can meet masterfully and profitably, not set an outlandish dream. For instance, staying with the pizza example, a business may decide that the market for fast and/or cheap pizza is rather competitive and has substantial resource requirements, and, therefore, score this potential market a two. On the other hand, they may look to the markets of healthy pizza or gourmet pizza and decide these have less resource requirements and are relatively under-serviced in their area, and ,as a result, score them a nine and a seven, respectively.

Step Three – Picking niche(s). The highest score(s) are a combination of where organizations are able to scale with ease, and the niches offering the best potential upside. In the pizza example, a business may decide to focus its attention on healthy pizza, deciding it is the profitable and easy-to-enter niche; or, they might decide to focus on both the healthy and gourmet pizza markets, letting the other pizza restaurants fight over the niches of cheap and fast pizza.

For business success, the matching process is a relatively simple concept, but an essential one. Focusing energy to the right niche or niches for an organization is a necessity. Without a niche focus, businesses will try to please all customers and end up competing based solely on price, which is a recipe for disaster. By employing the matching process, an organization can quickly become a market leader of one of several niches.

Matthew Pollard is a serial entrepreneur, published author, international speaker, coach, and consultant. The Austin-based entrepreneur is an expert in online sales, niche marketing and conducts business seminars. For more information: or


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