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Whose Customers?

     I have been receiving lots of questions about the last issue's topic, snatching customers is a lot easier than being a pioneer of a new market . I will cover the main points.

Customers to Lose

     There are lots of people who think releasing a new product before anybody else is an advantage. This is true if businesses are competing against each other to get customers for brand-new products. However, it's different when another business comes into an already established marketplace. Because the first business already got all the potential customers (so no customers are left), the new competitor can only steal customers from the established business.

Winning Strategy

     If you compare this to the board game, Reversi (Othello), it is much easier to understand. If both players are trying to get as many empty squares on the game board as possible, it seems to be a fair game, like two businesses who are competing to get untapped customers. But, if your opponent lets you take squares, it will surely look like you are winning the game, like you have established an empire in a marketplace. Then, at near the end of the game, there will be a strike-back. Each time the opponent puts in a new piece, a bunch of your pieces will be reversed. As you get more pieces on the board (acquire more customers), more pieces (more customers) will be taken away. (Actually, this is the winning strategy of Reversi.) The only difference between the game and running a business is there is no "game over": you can take customers back.

Options

     When someone comes after your customers, you will realize how easy your customers can be stolen; your customers are not as loyal to your business as you hope. The bottom line is to not be in such a vulnerable position. If you're aggressive, you can take advantage of this scenario. You can keep your eyes on what's going on in your industry. Then, when it's time, start selling copycat products and take the easy-to-get customers from them.

© March, 2011