How to Get a Sustainable Competitive Advantage in an Already Saturated Market

Any product or service that gains popularity is bound to invite competition. It’s a knee-jerk reaction for many entrepreneurs.

They think, “Oh, that guy’s doing well…I’ll just do what he did.”

It’s pretty much what happened to popular discount site Groupon. The service was a huge hit, and soon enough, everybody jumped in the bandwagon. Eventually the market got saturated.

If you’re one of the pioneers in the industry, good for you—you already have a head start against your competition. The question now is, “What can you do to create a sustainable competitive advantage against your rivals?”

For the new players trying to penetrate a competitive market, how can you stand out in a market that’s already saturated—or is about to reach it’s tipping point?

First you have to find out if the market is already saturated. Why? Because creating a business strategy before knowing where things stand is an exercise in futility. Conduct a competitive market analysis, and look out for the following signs:

  • What is the minimum barrier to enter the business? Ventures that require low capital or expertise easily get saturated.
  • Is the business or product becoming accessible to the masses? Is it a household name now?
  • Are you seeing knock-offs, cheaper imitations or alternative versions of the product?
  • Is the price of the product or service declining?
  • Has the cost for marketing increased?


Protecting Your Turf: Creating and Maintaining a Sustainable Business Advantage

  1. Cater to an overlooked or underserved clientele- This works well for new players looking to get a slice of the market. Instead of trying to get any and every customer, just aim for the ones that have unique needs—needs that the established businesses don’t serve yet.

For instance, the salon business is competitive and already saturated in many cities. But did you know there’s a small population of men who can’t do their own pedicures, but aren’t comfortable to go in the typical nail spas—where their bros might see them?

Yes, there’s a market for this! And their clientele pays top dollar for such services. How are these salons different? Unlike your typical nail spa, these boutiques cater only to men, there’s free whiskey and a divider for every booth so the client’s privacy—or anonymity—is maintained.

  1. Look for areas where you can harness restricted loyalty- This works well for businesses in rural locations, or in industries where the barrier to entry is extremely high. Examples include utilities, cable, and internet options in rural areas.

Big grocers also enjoy restricted loyalty if they’re the only one in town. Customers are forced to be loyal that way. The same goes for travel agencies with routes to a remote destination.

  1. Tap into other markets – You can do this by offering more products or services, opening in a new location, or tying up with complimentary brands.

For instance, Apple is expanding by venturing to payments processing through their newest service, Apple Pay.

Small businesses can do this, too. Just ask your existing customer base, “What else did you buy after buying (product/service)? This is classic cross-selling, a tactic used by Amazon and many retail stores where they show what other customers bought after purchasing a certain product.

For service based business, look at your past projects. What type of work made you the most profit last year? Then look for market verticals you could cater to. For instance, a luxury construction and remodeling company that’s making huge profits in home remodeling, can take that service and venture into remodeling of office facilities or healthcare facilities. The point is to expand your horizon and bid on projects a little outside your comfort zone.

  1. Ride the wave – McDonalds is losing ground, as more customers switch to healthier fast food chains like Chipotle and Five Guys burger. Customers are looking for fresher and customizable options, and plenty of small or family owned restaurants are popping up to answer the demand.

Savvy entrepreneurs don’t let the addition of new players drive their business to the ground. Instead, they devise new ways to set themselves apart from their competitors—even if there’s no obvious way to do it.


© 2015 Incedo Group, LLC