If you earned a Bachelor’s Degree in college, then—even if you were expected to create a thesis before you graduated—your degree was likely in at least a somewhat general field.
For example, if you went to business school, you may have earned a degree that was generally focused on Finance, Accounting, Marketing, Management, or Operations.
Despite the fact that many sources of formal education utilize a rather generalized approach, the real world of business is one that has become significantly more specialized as time has gone on.
Instead of creating a new business that generally focuses on “Marketing” as an abstract whole, you will be much better off creating a business that focuses on producing SEO content, running social media pages, promoting stories in the media, or anything else that is much more specific.
In fact, it seems that starting a new business with an incredibly broad scope is something that will often set you up for failure. Though creating a specialized business may make the initial planning process significantly more detailed, taking the time to focus on how you can offer the market something specific will inevitably pay off.
We take a look at the benefits of running a specialized business and how you can use these benefits to quickly establish a competitive advantage.
When you make the decision to start a new business, organizations or individuals who are already using a similar good or service will likely not make the switch your company unless they have a clear and obvious reason to actually do so.
Businesses are unlikely to abandon the status quo and they will be especially unlikely to willingly use an enterprise that has yet to fully penetrate the market.
Suppose the given product you offer is a cola. Individuals who are already established Coca-Cola or Pepsi drinkers will have very little reason to switch to using your brand—after all, if you are a new brand, the brand itself will have relatively no value and the product itself will likely cost significantly more than what they already trust in the status quo.
However, suppose you decide to narrow your approach and, instead of trying to match Coke, you specifically try to target young urban artists who enjoy drinking cola and are looking for a low-sugar alternative. You may be able to effectively penetrate a new market with a niche approach in a way that would otherwise be impossible.
Just as using a specialized approach can help your business effectively begin to penetrate a new market, it can also help your brand sustain its value over time due to product differentiation.
As a new company, the burden of proof will always be on you to prove that you are better than the already existing alternatives and can actually offer your potential clients something that is completely unique.
Generally, when trying to differentiate your product from the already existing alternatives, it is a good idea to utilize what is commonly known as “The 4 Ps of Marketing.”
- Product—offer a good or service that is characteristically different than the competition. This gone be done using aesthetic appeals, increasing usefulness, and numerous other methods.
- Place—make a product available in a place where it currently is not. For example, selling a specific product at the grocery store may help you access a new audience.
- Price—make your product more affordable than the market equivalent. Unless you have created a luxury brand, people will generally want to pay as little as they can.
- Promotion—find unique ways to tell people about your product and quickly inspire them to go buy it. This can be done using sales, bulk discounts, various advertisements mediums, information marketing, and numerous other ways.
Products that are specialized will be much easier to differentiate than those that simply offer a general appeal.
Another reason that specialized businesses are in a unique position to succeed is that they can utilize the appeal of being small and local. In fact, according to recent surveys reported on by The Washington Post, more Americans prefer small businesses to large companies. They also prefer local businesses to international ones.
People prefer small, local businesses for many different reasons. The facts that profits are kept in the community, the businesses have an interest in the well-being of the neighborhood, and the business likely understands the community in a way that large multi-national organizations simply cannot are all reasons that being a local business can be incredibly advantageous.
By being able to claim that while other businesses try to target everyone, your business targets a specific group (community), you will be putting yourself in a unique position to succeed.
Appeal to Authority
Though this principle may be somewhat counterintuitive, businesses that specialize in offering a specific product or service often have a significantly greater appeal to authority than those whose approach to marketing is much broader.
While it would be impossible for a person working at a large business to have sufficient knowledge about everything, it is certainly much more possible for a small business owner to have sufficient knowledge about something.
By coming up with an incredibly specific mission for business, such as “We plan to offer x (product) for y (type of person) that will help them solve z (current problem)”, the people who fall into any of the categories you are currently targeting will recognize that you will be much more likely to actually help them than someone who is much further removed.
Additionally, by offering the market a very specialized good or service, you will have a significantly easier time adapting to changes in the market as a whole.
Though there are still some reasons that larger companies often have an advantage—operating on an economy of scale, having access to increased capital, and having widespread brand recognition—there are still many reasons that specialized businesses can still offer objective value to their clients. By being different, local, and highly familiar with what your business provides, even a single person operation can still be quite successful.