In Learning From Your Competition, I discussed what things you can learn from your competitors, including what price, which promotions, and which combinations of products are most likely to be effective for your business. But if your business just copies what other businesses do, why should any customer go to you? This is especially true on the internet, where “Just like Facebook, only different” has repeatedly proven a recipe for failure.
What your competition does is safe
Nonetheless, copying the competition is a good place to start your entrepreneurial ventures, because you know there’s a market for what they’re selling. If you offer a product that’s basically the same as your competitors’ most popular product, at a price that’s the average of all their prices, using the same promotional methods as they do, you’re pretty much guaranteed to sell some of it.
It’s a low-risk choice, but it’s also a low-reward choice: since your offering is essentially identical to everyone else’s, you’re relying on the vagaries of fate to randomly steer some of the customers in your direction.
Once you’re safe, then experiment
With your solid base of safe, low-risk products, you have a relatively stable platform from which to explore. Now start experimenting.
Experiment with new products, or product combinations. Would your customers like these new items? Would they like the deluxe edition? Instead of buying products individually, would they like a subscription?
Experiment with prices (the people who select the MSRP are just guessing, too). If you put this on sale for 10%, does it increase the number of sales by more than 10%? If you increase prices on this one by 5%, how many people still buy it? What does it go for on eBay? Does it make sense to have different prices at different times of the day? Different times of the year? In different locations?
Experiment with delivery. Does it make sense to open another location? To offer home delivery? To create e-products that can be sold everywhere? Will customers pay extra for quicker delivery or more efficient locations?
Experiment with promotions. Is advertising the best method? What about networking meetings, or a booth at local events, or seminars at your local library? Are your customers on Facebook? Would they like to receive information via text message or email?
Keep what works, get rid of the rest
Eventually you’ll have a fantastic marketing mix — product, price, distribution, and promotion — that is great for your customers, and gives them a reason to bring their money to you.