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This is the key to business success in today's very competitive market. Don't fight price! Innovate! Differentiate.
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A Business Lesson
EggsBy
Chris Reich, TeachU.com
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Eggs
Why do some businessesbarely survive while others thrive?
A Business Lesson from Eggs
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Business Idea Hatches
We can sell eggs!
Good idea! Nearly everyone buyseggs. The demand is high.
Eggs aren’t expensive and they have a pretty long shelf life. We have a supplier.
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Let’s Start a Business
We have raised the money toStart our business.
We are going to sell eggs.
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Make a Plan
Now we must make a plan.
We can get the eggs from the eggranch just like the big stores.
A dozen eggs, in cartons with our brand, cost us only $1 per dozen.
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Business Plan
This is great!
At the local market, a dozen eggssells for $2.29. We can under cut the store and sell our eggs for less. We’ll try $1.99.
That’s the plan. We will beat our competitor by selling for less.
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Slow Sales
After a month our sales arevery disappointing.
Why? We sell our eggs for less. Why aren’t they ‘flying’ off the shelves?
We discover something shocking!
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Price War
The local store has cut the priceof their eggs to $1.59!
Okay, we can cut to $1.49. That is how business works! Fight for market share!
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Let’s compete!
We will advertise our lower price!
We can beat that local market!
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Advertising
Sales still aren’t very good.Ad didn’t do much.Advertising is very expensive.
What’s wrong?
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Let’s Investigate
We do some research and learn:People buy eggs at the storebecause they can buy other thingsthey need at the same time. (Convenience)
If we decide to carry more items, our cost will go way up.
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The Solution!
We can cut our price even more.
That will make it worthwhile to thecustomer. Right?
Let’s cut to $1.29. We’re still making a profit and we will capture the egg market!
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More Problems
That darn store is having a sale!
Sure, it’s only for a week but theirsale price is 99¢! That’s our cost!
We can pressure the supplier to cut our price but the store is a bigger customer so we don’t have much clout.
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What to Do?
What can we do? We’re going broke.
We can quit.We can change plans.
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More Bad News
Now we find out that a newCrusher-Mart is opening.
Even the local store is worried.
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Farmer Bob
Who is this? Farmer Bob.
Farmer Bob has very specialeggs. His chickens eat only goodstuff and they get to run around his farm.
The eggs are bigger and way tastier!
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More Problems
His eggs are expensive.They cost us $2 a dozen.
What can we do to stay in business?
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The Answer
Since his eggs are bigger,let’s sell a smaller package.
We can sell 6 at a time instead ofa dozen.
We can sell 6 for $2.
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Success!
People are willing to come toour egg store just to buy eggs.
They pay more too but they don’tcare because our eggs are so much better.
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Success!
Our business grows!
Not from advertisingNot from social mediaNot from price cutting
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Success!
Our business grows!
Differentiation.
Our business grew because our offer is different. We don’t compete with the local store or the Crusher-Mart. We offer what they do not.
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Your Business?
Is your business fighting a price war?Is your business losing ground to bigger and bigger competitors?
Well then…Is your business different?
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Be Different
Differentiation is the first step toward success.
You can’t be afraid to be different.
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Your Business?
Innovate. Create. Differentiate.
You can do these things. Be brave. It’s worth it.
This encouragement is brought to you by:Chris Reich of TeachU, [email protected](530) 467-5690
