Tell me how many competitors you have, and I will show you ways to differentiate your business. If you are in business today, there is a good chance you are in a saturated market.
You shouldn’t be afraid to compete in saturated markets. Market saturation should motivate you because it’s evidence of a large group of customers. In saturated markets, great business opportunities exist.
But, how do businesses compete in a saturated market?
The best way to compete in saturated markets is to differentiate your business. You don’t need to create a revolutionary new product to differentiate your business. You need to improve a product or service customers already buy.
Is doing business in a saturated market hopeless?
But running a business in a saturated market isn’t hopeless. It’s an opportunity to stand out. It’s simply your chance to differentiate from weaker businesses.
Many businesses enter saturated markets, but only a small percentage succeed. The companies that succeed in saturated markets use the competition to their own advantage.
These companies find ways to optimize customer acquisition. And they figure out how to build a loyal customer base. To these rare companies, the competition offers the road to success. No matter how saturated the market gets, some businesses manage to differentiate and succeed.
So, what’s their secret? How can some businesses thrive in some of the most competitive markets while others fail?
Is your business in a saturated market?
You may not believe it, but saturated markets are everywhere. And if your market isn’t saturated yet, it will be soon.
Let’s face it; there are millions of businesses out there competing for the same customers. And most of these companies offer the same products or services. The average companies will compete on price, sacrificing profit margins just to stay in business.
Think about the products you buy and the services you use. They all have competition in the market. And they all exist in a saturated market, even though some deny it.
Even if you create a revolutionary new product, the market is quickly saturated with competing products. It happens every time. Someone will offer the same product for a lower price. Or, another business might offer better support for the product.
If there is a large potential customer base, the market will be quickly saturated. There are new competitors ready to take your customers and make your business irrelevant every day.
The Advantage of A Saturated Market
In reality, a saturated market isn’t bad. It creates better businesses and more options for customers.
Unfortunately, only the best-managed businesses can compete and thrive in saturated markets.
The more competitors there are, the more they force you to improve your processes. This leads to greater efficiencies and stronger companies.
Competition is an opportunity to grow and excel. It forces companies to remain innovative and pay attention to customers. But, it’s a killer for businesses that become complacent.
Market Saturation Makes Better Companies
Competing in saturated markets forces you to become a better business. It pushes companies to remain innovative and conscious of customer service.
And the increased competition also provides a balance in pricing for customers and helps create a better work environment. The heavy competition also forces businesses to grow rather than become complacent in the comfort of short-term success.
Product Differentiation: The Key to Competition in Saturated Markets
The biggest mistake companies make when entering a saturated market is to mimic the success of others. Copycat strategies might seem effective, but they will always fail in the long run.
There are two major misconceptions regarding competing in saturated markets:
- You need a revolutionary new product to compete. The fact is that most successful products are improvements on existing products.
- You can compete in a saturated market by offering the same product or service at a lower price. Most customers need more than a lower price to switch to a new brand.
In other words, to outcompete the competition, you need to do more than mimic others. Most customers are on the lookout for something fresh. Unfortunately, most businesses misunderstand that.
They assume customers are tired of the old and want a completely different product or service. The reality is that a simple twist on an already popular product is all you need in a saturated market. This understanding of the competitive landscape can go a long way.
Companies that thrive in competitive markets can take an existing concept and perfect it. The perfect product isn’t something completely new. It’s a familiar product to the customers but was never perfected. If you can do that, your company will become a huge success, and your profits will soar.
Instead of looking at what your competitors are doing, you should study what they aren’t doing. Your competitive edge isn’t selling the same product for less than the competition but understanding the shortcomings of other businesses.
In a world where most markets are over-saturated, you need a new way of thinking about competition. It’s the only way to differentiate your business. If you succeed in doing that, you will create a company that cannot be rivaled.
How to differentiate your business in saturated markets?
The only way to survive and thrive in saturated markets is to differentiate your business from competitors. Although this is a common strategy, it’s rarely executed correctly.
Why is differentiation so hard?
Here’s what makes differentiation extremely difficult.
You have to offer a product that is similar enough to other products. But why do I have to offer a product similar to others? This seems counter-productive since everyone tells you that your product should be different. It should be revolutionary. But if your product isn’t familiar to the customer, they won’t buy it.
The iPhone was a hit product from day one. Everyone understood the difference between the iPhone and all other cell phones on the market. We already had cell phones when Apple released the first iPhone. So, Apple didn’t have to create something completely new.
All it had to do was improve the cell phone experience. Apple could sell millions of iPhones without having to educate the user. Everyone knew that the iPhone was the best cell phone once they touched it.
Do you need a revolutionary new product to differentiate?
So, your job isn’t to create a revolutionary new product. All you need to do is create an improved version of something people already need or want. If you can do that, you will differentiate your company from competitors.
If you pay attention to what customers tell you about the products and services they use today, you can differentiate your company from others tomorrow. If you are willing to do that, you will stand out from the crowd and gain an advantage.
Why can’t you differentiate your company?
Differentiation is impossible for most businesses. It’s impossible because most businesses refuse to listen to customer feedback. And as a result, they fail to differentiate. They compete on price, joining the army of me-too businesses that never successfully differentiate in a saturated market environment.
Your Competitors’ Customers Help You Succeed
If you want to compete in a saturated market, you need your competitors’ customers. But, how do you get your competitors’ customers? It’s simple, do what others aren’t willing to do. Build a better product based on what you learn from the customer.
This is so obvious, yet most businesses get a failing grade. For some reason, many businesses care more about customer acquisition than customer retention.
Listen to the customer if you want to differentiate your business in a saturated market. You should visit the forums and groups where customers discuss the competition.
Customers complain about products and services everywhere. You don’t have to dig too deep to learn what people like or dislike. From Twitter to Instagram, customers are ready to share how they feel about companies. And they don’t hold back.
Smart companies listen and react positively. But most ignore these customers. These companies are too busy chasing new customers to reach out and help. And, that’s your opportunity to learn.
How to differentiate your business based on customer feedback?
Your best business ally is your competitors’ customers. They can help you figure out how to improve a product or service. If you pay attention, customers will tell you exactly what they want. And if you are willing to do what they want, you will differentiate your business even in a saturated market.
Differentiate your business through partnerships
You are stronger with your business partners. If you dedicate your efforts to building successful business partnerships, you will differentiate your company in saturated markets.
The best partnerships are win-win for all involved. And it will help you be more competitive.
Partnerships offer you to acquire new customers without a huge sales and marketing budget. It’s a business development strategy that’s underutilized by most businesses today.
Leverage Through Partnerships
Partnerships allow you to leverage another audience. It’s an effective shortcut to business success. Partnering with businesses is a competitive advantage in saturated market niches.
Through business partnerships, you gain access to new audiences. Professional associations, non-competing businesses, and influencers that target the same customer demographics can help you drastically reduce your customer acquisition expenses.
Develop a strategy in which you leverage other professionals or organizations and their relationships to build awareness for your own business.
How to build successful business partnerships?
Find companies that serve the same customers you are targeting. As long as you are not competing, you will both benefit.
Being Different In a Saturated Market Isn’t That Hard
Something as simple as redesigning an existing product to enhance the user experience can go very far. Look at some of the new Robo-advisors.
There is no shortage of established financial services firms in the market, but Robo-advisors have become the perfect solution for customers looking for low-cost financial advice.
Knowing that customers struggle to find easy-to-use, inexpensive investment help, Robo-advisor companies were ready to step in and fill the gap in an already saturated market.
They didn’t invent financial advice. Instead, Robo-advisor solutions simplified the process of investing, creating hands-off investment opportunities that didn’t exist before.
The same happened with Airbnb. The company didn’t invent short-term room rentals, but Airbnb created a platform that simplified the experience for homeowners and customers. The idea wasn’t revolutionary, but it was an improvement on something familiar. They understood the need for an improved user experience and turned it into a product.
Bringing a brand to life takes time regardless of market saturation. The saturation is a sign of the potential for success. It’s a testament to the need that is out there for innovation.
The fact that so many businesses compete for the same customers is a good thing. As a result, companies become stronger or die, and customers enjoy improved products and services, often at reduced prices.