Most industries are now flooded with competition.
The barriers to entry in most markets are at an all time low. To set up an ecommerce store all you need to do is set up a store on Shopify, create social profiles and market it to death. To set up a social media marketing agency you don’t need any qualifications - just a laptop and results from previous social media campaigns.
Or so people think.
The truth is the lack of barriers to entry can actually be a bad thing. There are now far too many businesses competing for too few customers. With the entry of hundreds of startups to most industries every year, but the same number of customers usually existing in most established markets, it just makes it harder for everyone to compete in the category.
The first rule of economics - supply and demand - teaches us that when supply outstrips demand prices within an industry fall. In simplistic terms, more competition = lower prices.
But what about the few businesses at the top? The few guys at the top who still seem to do well, picking up the majority of business whilst the rest struggle, fighting each other with discounting, advertising and the latest shiny marketing tactic.
They’re still fighting for business but they’re sailing above the rest. Why? Because they have set themselves apart from the rest of the industry. Either with reputation, a USP, branding or being the only option in a customer’s mind.
We live in uncertain times with big changes in spending habits, globalisation and demographic shifts.
Globalisation means national businesses are now competing internationally. A developer in London is competing with a developer in Mumbai. A marketer in Manchester is competing for business with their counterparts in Poland. Globalisation is an amazing thing. It’s allowed us the opportunity to network with the world, to make friends across the globe and visit stunning countries.
But with it comes its own challenges and marketers must adapt to the effect globalisation has had on prices and industry. You can no longer sit back and compete locally - marketers and brands need to think beyond their own location and find their place in the new world.
What have Baby Boomers (the generation of people born between 1946 and 1964) got to do with marketing?
Most marketing decisions are made because of someone's stage in life or current situation. Someone who has just moved into a new home might be in the market for furniture, someone who has just got engaged might be looking at wedding venues, someone who just had a baby will probably be searching for baby products.
When there are a large concentration of people within a certain demographic like Baby Boomers or Millennials - they tend to create economic booms. In America, 76 million babies were born between 1946 and 1964. 45% of those Baby Boomers bought their homes between the ages of 25 and 34 - meaning over 34 million Baby Boomers bought a new home over a 9 year period. With so many people making one of the biggest purchases they had made to date, all of these people moved through traditional marketers buying funnels at the same time creating new industries and huge wealth for brands who catered to their changing needs.
We can follow similar economic booms through by tracking the ages of Baby Boomers. Car purchases, medical insurance and holiday destinations all correlate to where the mass of Baby Boomers were in their life cycle.
As Baby Boomers have gotten older we’ve seen the rise of private companies providing residential homes for the elderly and the number of cruises increase. Whole industries have been created to cater to the changing demographics in developed countries.
Baby Boomers are a generation who have enjoyed a long period of wealth. But they haven’t always had it easy, they were the first to be exposed to TV advertising - for the first time they had a glimpse of what the wealthiest were getting up to. They saw celebrity endorsements and the latest gadget for the kitchen.
They were perhaps the first aspirational demographic, striving for more and sometimes being disappointed when their reality didn’t match that of others.
Something a lot of Millennials can relate to.
Millennials become the biggest adult generation
In 2019, Millennials have overtaken Baby Boomers as the single largest adult generation in developed countries like the US and UK.
What does this mean for marketing?
As Millennials (the generation of people born between 1981 and 1996) reach their prime working and spending years, their impact on the economy is going to be huge. Changes in the affordability of housing is a big issue with more people turning away from home ownership and choose renting.
Millennials are also more likely to be single and without children than Baby Boomers which alters conventional thinking around the age at which traditional purchases are made. Car ownership among the younger generation is falling and is expected to have peaked in the 2000s.
All of these factors have resulted in impacts across various markets. Housing, car buying and retail have been particularly affected by changing demographics as Millennial spending and behavioural habits shake things up.
Changing demographics & priorities
Purpose and identity are two words commonly used by people who fall into the Millennial category. The need to identify with a purpose and to carve your own identity has become a huge part of modern day culture.
We have a different set of priorities to previous generations.
You not only strive for more for yourself but for those you care about and often the planet. Our purpose is driven by more than ourselves and we’re often seen as the fluffy generation because of our need for fulfillment.
But is that such a bad thing? Is it bad to want to improve the lives of others and the planet?
Brands that heed this message are thriving and building communities of people who are engaged and mobilised to be a part of the brand’s purpose.
Why do businesses exist?
Why do businesses exist in the first place? The obvious thing that springs to mind is to create wealth for the person who set the business up.
But beyond that businesses exist to:
● Create employment and nurture talent
● Contribute to the economy through taxation
● Drive innovation with new products and services
But really when it comes down to it most people are in business because they don’t want to work 9-5 for someone else. They want to create their own future and make a bit of money doing it instead.
So what’s the point of your business existing?
Beyond making money, why does your business exist?
What’s the point?
If you’re just here to make a bit of money you’re more than likely not going to last long in the competitive landscape of modern business and startups.
Eight in ten companies fail within their first year.
There are lots of reasons why businesses fail, but these three are perhaps some of the most important reasons:
● They don’t solve a real problem
● They run out of money
● There is no differentiation i.e. they’re the same as everyone else
The running out of money issue is pretty obvious. If your outgoings are higher than your income for a sustained period, you’re going to run into cash flow problems and your business will fail. The other two reasons are perhaps a little more complicated. The problem of no differentiation stems from a bigger problem. There are too many players in most sectors. The big boys in each sector account for the majority of revenue and everyone else is fighting for the leftovers.
If you’re not in an industry it’s easy to look in and see the success stories written in the news and on social media. But what you don’t see is the rest of the market struggling to make any money or headway.
Before you enter into an already saturated market, think carefully and ask yourself “do we really need someone else in this space?”
If the answer is yes, ask yourself “What’s the point?”
Hopefully this will get you thinking about the real reasons you want to get into business in that particular market.
It should come down to there being a problem you have noticed that you can solve better than anyone else is currently. One where you can really add value to a customer’s life and do it better than anyone else already in the market.
Going beyond product market fit
So you’ve identified your market and the problem you want to solve.
When you’ve proven that a customer will pay you to solve a specific problem you’ve found something called your “product market fit.”
Marc Andreessen, the co-founder of venture capital firm Andreessen Horowitz, defined the term product market fit as “being in a good market with a product that can satisfy that market.”
Lots of business and startup blogs talk about finding your product market fit but what they don’t talk about is the fact that a lot of founders lose sight of why they started their business in the first place.
When you’re bogged down in developing a product or growing a business it’s easy to forget that problem, so when you’re building your business constantly ask “What’s the point?”
It will keep you aligned with the problem you’re trying to solve and remind you why you developed the idea in the first place.
Going beyond profit
One way to really get yourself motivated and finally answer the “What’s the point?” question is to have a purpose beyond profit in your organisation.
The likes of glasses retailer Warby Parker and shoe brand TOMS are prime examples of brands thriving with social change at their core.
Often founders and management teams run out of steam and energy when they’re starting out by trying to grow with overworked teams who barely make it to the end of the week without burning out.
If you have a purpose beyond profit, the chances of you getting demotivated are a lot lower – because you’re working towards something you’re truly passionate about.
It’s your responsibility to carry on ploughing forward, because you are the person put on this planet to make the change you’re pushing for.
Saving the planet, helping reduce poverty or making lives better is a much bigger motivator than your P&L sheet.
Constantly ask yourself “What’s the point?” Never ask it in a negative way but in a challenging way to keep you aligned with your goals and ambitions.