Written by Brian Whipple, Program Coordinator of the WT Enterprise Center. For more information about the WT Enterprise Center visit www.IncubationWorks.com.
“We are the only company that sells XYZ product in-between Albuquerque and Oklahoma City.”
This is the line that I hear from start-up and existing Amarillo companies on a regular basis. Often times it is said with pride and used as a selling point. And for many, it is their main competitive advantage.
There is nothing particularly wrong with this strategy for the short term, but unfortunately it falls short in a couple of ways when considering long term strategy. I always ask three questions to make my point.
1. What happens when another Amarillo company decides to start selling the same product as you? When this happens, all of the sudden you are not the only company that sells that product in the area. Granted, your company may be the area leaders because you were first to market, but if the other company decides to sell it cheaper or provides a better product then you are stuck.
2. What is stopping me from buying it from the company in Dallas? Or Oklahoma City? Or Albuquerque? Or . . . you get the picture. In today’s online and overnight shipping world, it really isn’t that much trouble to order the product from another city. Again, there can be certain circumstances where it is a better to buy local such as services or products that can’t be shipped. But in many circumstances there really isn’t anything to stop me from buying out of town.
3. What happens when you grow and want to start selling in Albuquerque or Oklahoma City? Again, you quickly lose your competitive advantage, and you have cornered yourself so that you can no longer grow outside of the Amarillo area.
As mentioned, this strategy isn’t the worst strategy out there, but it definitely isn’t a sustainable long term strategy aimed for growth. If this is your only strategy then you might want to consider the above points. A better approach is to identify why your company is better than the competition, and position yourself for long-term growth.
What challenges or successes do you see with this strategy?