Elaine Hirsch is a writer who has contributed to my blog previously (see her last post on how small businesses can strive to be great places to work) and describes herself as a “jack-of-all-interests from education and history to medicine and video games.” In this post, Elaine brings to light the challenges that small business owners face when competing with big corporations and shares advice about how they focus on their strengths and create a niche to deliver great products and services to their customers. She is currently writing for an online school resource.
Many small business entrepreneurs have been under assault by big box companies and internet retailers such as Wal-Mart and Amazon. Big box companies often locate their massive stores at the edge of towns large or small and suck the small business life right out of the town square. Mega-internet retailers like Amazon are selling anything that can be packaged and shipped – books, electronics, shoes and even perishables like fresh food.
Corporate giants are developing technology that makes it extremely easy for customers to compare prices across cyberspace and while shopping at the local mall. Amazon has developed a free bar code scanner smart phone application which enables the device’s camera. A shopper can scan a barcode and Amazon will match that price and offer a $5 incentive if he or she buys the product through Amazon. In doing so, Amazon is updating traditional pricing tactics you learn about in MBA programs with a twist by adding a mobile phone aspect to it.
Some small businesses are fighting back. According to the New York Times, Lori Andre, owner of Lori’s Shoes, an online and physical store based in Chicago, has an answer. She is asking vendors to give the shoes that Lori’s carries different model names than it gives other stores or to put a different label inside so shoppers cannot compare prices with a Zappos, an Amazon company. Other small businesses are removing bar code labels altogether.
So what else can small businesses do to compete against large corporations? The best approach is to change their current business model and look towards innovating the product, service, packaging and carefully segmenting their market. Pangea Organics, a U.S.-based body care products manufacturer, identified socially responsible, environmentally aware consumers and began packaging their products in recycled materials complete with seeds implanted into the packaging cartons. Smaller companies such as Pangea can be more nimble, make decisions faster, and change much more rapidly. Big companies often fall prey to conformity and avoid the risks smaller business can take.
Small business can take advantage of possible resentment among consumers towards big box and mega-internet retailers. Many consumers are using their purchasing power to buy goods and services from local, small businesses. Small businesses must then leverage their core strengths:
1. Creating a niche market few can duplicate
2. Focusing on excellent customer service
3. Building lasting customer relationships
4. Pursuing professional excellence and quality
Creating a niche such as producing quality, handmade goods can be exceedingly difficult for large companies. They have to rely on volume from manufacturing facilities mostly in other countries, resulting in inexpensive and often poorly made products. Many consumers demand a high level of customer service, particularly for products and services that are more costly. The personal touch is something the giant companies cannot provide given the scale it takes to provide. This is where the small business can shine, build lasting customer relationships and repeat business. Professional excellence and quality go a long way in establishing a solid reputation. Since word-of-mouth plays such a prominent role in any business, small businesses can better capitalize on the prospect of positive references.
The time has never been better for small businesses to refocus their strategy and create a model that builds lasting value for customers served.
Many small business entrepreneurs have been under assault by big box companies and internet retailers such as Wal-Mart and Amazon. Big box companies often locate their massive stores at the edge of towns large or small and suck the small business life right out of the town square. Mega-internet retailers like Amazon are selling anything that can be packaged and shipped – books, electronics, shoes and even perishables like fresh food.
Corporate giants are developing technology that makes it extremely easy for customers to compare prices across cyberspace and while shopping at the local mall. Amazon has developed a free bar code scanner smart phone application which enables the device’s camera. A shopper can scan a barcode and Amazon will match that price and offer a $5 incentive if he or she buys the product through Amazon. In doing so, Amazon is updating traditional pricing tactics you learn about in MBA programs with a twist by adding a mobile phone aspect to it.
Some small businesses are fighting back. According to the New York Times, Lori Andre, owner of Lori’s Shoes, an online and physical store based in Chicago, has an answer. She is asking vendors to give the shoes that Lori’s carries different model names than it gives other stores or to put a different label inside so shoppers cannot compare prices with a Zappos, an Amazon company. Other small businesses are removing bar code labels altogether.
So what else can small businesses do to compete against large corporations? The best approach is to change their current business model and look towards innovating the product, service, packaging and carefully segmenting their market. Pangea Organics, a U.S.-based body care products manufacturer, identified socially responsible, environmentally aware consumers and began packaging their products in recycled materials complete with seeds implanted into the packaging cartons. Smaller companies such as Pangea can be more nimble, make decisions faster, and change much more rapidly. Big companies often fall prey to conformity and avoid the risks smaller business can take.
Small business can take advantage of possible resentment among consumers towards big box and mega-internet retailers. Many consumers are using their purchasing power to buy goods and services from local, small businesses. Small businesses must then leverage their core strengths:
1. Creating a niche market few can duplicate
2. Focusing on excellent customer service
3. Building lasting customer relationships
4. Pursuing professional excellence and quality
Creating a niche such as producing quality, handmade goods can be exceedingly difficult for large companies. They have to rely on volume from manufacturing facilities mostly in other countries, resulting in inexpensive and often poorly made products. Many consumers demand a high level of customer service, particularly for products and services that are more costly. The personal touch is something the giant companies cannot provide given the scale it takes to provide. This is where the small business can shine, build lasting customer relationships and repeat business. Professional excellence and quality go a long way in establishing a solid reputation. Since word-of-mouth plays such a prominent role in any business, small businesses can better capitalize on the prospect of positive references.
The time has never been better for small businesses to refocus their strategy and create a model that builds lasting value for customers served.
