Launching a business in a saturated industry could be a daunting challenge for startups who have genuinely identified a need and are interested in creating products/services to meet such needs. Determining how to succeed when confronted with thousands of competitors in a market is also a major challenge for small business owners. But with the right strategies, success is assured.
A crowded industry is a sign of huge demand for its products and services it renders. Many businesses would often land in one of such saturated markets. The higher the demand, the more the willingness of customers to pay for products/services that can satisfy them. Thus, operating in a crowded market is proof that your business is in a profitable terrain with the availability of customers and ample potential to succeed.
For instance, there are thousands of sachet/bottle table water businesses in Nigeria and other sub-Saharan African countries because of poor access to potable water in these countries. Even though water is an essential need of humans, scarcity of clean and safe drinking water is a huge problem in this region; with about 300 million people (up to 35 percent of the estimated total population), not able to access potable water. This huge demand justifies the surge of the water bottling/packaging business.
If we also agree with Mark Twain, who says “There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope. After giving them a turn, they make new and curious combinations. We keep on turning and making new combinations indefinitely, but they are the same old pieces of coloured glass that have been in use through all the ages.” All of these are results of strategies.
Every industry has the potential to become saturated at one point in time. For startups, it’s even safer and more cost-effective to innovatively invade pre-existing business terrain than trying to re-invent the wheel with a completely novel idea.
In the early 90s, water bottling was a novel idea; a product of someone’s innovative thinking. Back then, we could count the few brands in the industry; we knew them by their names, and their names sold the product. Today, except for very few industry players, nobody cares about the names, all they want is clean and healthy water.
A startup with innovative ideas about packaging water in a way that is safer for the environment (since sachets and bottles have been known to be hazardous non-degradable) will succeed in spite of the current number of brands in the water packaging industry.
Strategies to navigate and survive in a saturated market
Entrepreneurs should not be afraid to foray into a crowded business. The advantages outweigh the demerits. They also need to understand that being in a saturated market is not a problem, however, as an entrepreneur, you need to ensure your business finds its feet, gains market traction or dominance and increases customer base despite the keen competition.
Here are five proven strategies that can help you navigate and survive in a saturated market:
1. Don’t be Intimidated by Competitors, Use Them to your Advantage.
Many startup owners pay too much attention to competitors. The ‘wow’ factor in products, the enormity of their customer base, branding, supply chains, staff etc. Unfortunately, an intimidated brand cannot develop a competitive edge. The efforts and funds invested into combating the perceived enemies through aggressive marketing, price war or even going as far as modelling your products after the big players in the industry, should be channelled into investing in the quality of your products to suit customer needs.
A business on the path to succeed in a saturated market is not intimidated by competitors. Instead, it uses them as a driving force to keep up to date with industry trend and innovative approaches to satisfy customer needs. Always remember that the focus is not the competitor, it is the customer. Instead of constantly trying to find out what they are doing right to get customers, try to find out what they are doing wrong and leverage on their weaknesses for the success of your business.
2. Carve a Niche for your Brand.
When operating in a crowded market, it is better to focus on the strengths and competencies of your brand and capture the aspect of the market that values your competencies, instead of trying to capture the overall market and becoming a jack of all trade, master of none.
There are several eateries and restaurants around, but we all know where to go when we need to eat some specific delicacies. Some eateries serve continental dishes, while some focus on local African cuisines.
Some restaurants are children friendly: providing diaper changing rooms and children playgrounds for their customers. A few have alluring ambiance for date-nights whereas some are better for crowdy lunch eat-outs. In a saturated market, there are customers for everyone; the question is: are you capturing yours?
3. Be constantly innovative with your business ideas
Innovation is crucial for business growth, whether you operate in a crowded business industry or you are exploring new terrains, you need to be innovative. Successful entrepreneurs are those who constantly seek knowledge about how to make their products, operative systems and service delivery better.
The world is embracing technology as a faster, reliable and easier approach to creating solutions to our collective problems, is your business doing the same? The trends keep changing daily, and only a fast-paced business can catch up. It’s better to join the train of innovators or be left behind. Remember that customers only patronise brands that innovatively meet their needs, so, get your innovative caps on, competitors aren’t sleeping!
4. Know Your Customers and Remain Loyal to Them
Since you have carved a niche for your business, the next thing to do is determine your target customers. Everybody eats to survive, that puts the potential customer base for eateries in Nigeria, for instance at 150 billion according to the National Population census estimates.
However, how many eat out? How many of those people would love to eat in a restaurant where local cuisines are served at a premium price per plate? Once you have identified them, you need to devise means of reaching them and constantly ensure their needs are met in innovative ways that will prevent them from noticing your competitors.
Know your customers, their needs and how they want their needs met, purchasing power, spending patterns etc. The key is to stay relevant to the needs of your customers.
5. Invest in Efficient Branding and Brand Visibility
The biggest disservice you can do to your brand is having a fantastic product that people need, but they don’t know it exists, neither do they know where and how to get it. Everyone loves an accessible and relatable brand, so you need to build such brand conscientiously. The big players in your industry did not acquire their die-hard customers overnight; they did through persistent brand and product awareness.
6. Build and Value Relationships
In the journey to business success, you need lots of loyalty: from customers, suppliers, employees, partners, key stakeholders in the industry, the media and the general public. Having strong and loyal allies is a strength that many of these industry giants leverage on. However, the allies are an of-shoot of relationships built over the years.
As small business owners, we need to value relationships over money. The result is to make profit but if you ever get to a point where you need to choose between people and profit, choose the former. In the long run, the people you choose will give you access, opportunities or even ideas to make profit.
7. Make your Sales and On-boarding Experience Easy
Customers love ease and convenience of purchase if you can take your products to them, do so. Your customer is king, give him royal treatment; don’t try to make his purchasing experience cumbersome and time-consuming. Everyone values people who make their lives easier, ditto for brands who make the lives of their customers easier.
8. Don’t Try to Copy, Protect your Originality
There is always a strong temptation to model your product component, name and packaging after pre-existing products in the market. However, imitation is a red flag for poor quality. Copy-cat products are a turnoff to customers who seek quality.
Instead of attracting more customers, imitation will push them away from your brand. A copy-cat can never attain the level of the originator who has the secret components that make the product endearing to customers.
9. Don’t Play the Price War
Startups in saturated markets should resist the urge to compete based on price. It is a war they can never win. Industry incumbents have the financial resources to buy raw materials in bulk at cheaper rates. They have the manpower to drive huge production, which puts them on the winning edge. You cannot afford to compete with them based on price because your cost of production will always be higher. Your best approach is to offer ‘needed’ value such that customers buy your products regardless of the cost.