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Differentiate yourself

While thinking of running a new business, trendy behavior consists of improving something it is already done. We usually consider: ‘If offer a similar product but introduce some new improvements, such as better quality, service or price, for sure I will pick up some market share, and consequently my business will be profitable”. This argument is valid but a little detail has not been considered. After regarding your appearance, your competitors would initiate a response that will lead your business to a price-based contest, affecting operative margins and therefore profitability. This is what Porter defined as a “zero-sum competition”, where every improvement developed by the company was directly collected by the customer, the supplier or a different agent, but not by the creator instead. This situation erodes the market long-term profit and consequently their members. For instance, the whole benefit created by the store brands is collected by the customer, by means of a huge margin fall, but not by the market itself.

Fortunately, it is always an alternative for everything in life. The point is: Why do not take a business no one else is currently operating? Why do not consider a completely different way to meet a market’s demand? This argument is the base of the “Blue ocean” theory, created by W. Chan Kim and Renée Mauborgne, whose original article has been included in the HBR Must-Reads on Strategy collection.

They propose you to find an opportunity and deploy a new product/service to meet its demand to instantly collect a market share otherwise not possible to be reached by a start-up company. Furthermore, you will become the market-owner and consequently will shape the competitive forces yourself, instead of playing a game whose rules were already invented a long time ago. Besides the wide range of advantages to differentiate your brand when arriving first, you may define your prices without attending to your competitors and thus getting a profitability many times higher to a crowded scenario, as done by Apple or Facebook.

This idea is not only applicable worldwide but also from a local point of view, since Internet has come to stay and everything is possible. What are you waiting for? Brainstorm new opportunities, evaluate your resources and go after it!

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