In strategic marketing “speak”, who earns more money – a general practitioner or a specialist physician such as an Ophthalmologist? The latter has spent additional years studying with emphasis in one particular area of practice which makes him/her both scarce and sought after in his/her profession. Same goes for an organization which has spent years studying the market with emphasis on doing one thing, but one thing extremely well. This automatically justifies higher fees translating to improved earnings. How does a saddle maker to the horse and carriage trade reposition itself to maximize its know-how in leather goods to now ask US$4,500 for a simple briefcase? Or even hawk silk scarves at US$400? Think of Hermes.
The answer lies in specialization, craftsmanship, and branding.
As with all other specialized professions, a business, which chooses to concentrate on a particular market segment should earn simply be generating higher revenues.
Alternatively, if you join the herd of the mainstream, there is always a vast consumer audience to tap. Profit is driven by volumes. It is harder to compete on price to the point of being perceived as offering a commodity with little or no differentiation – otherwise known as a “unique selling proposition” (USP). The only exception to that rule is when an enterprise keeps churning out innovative, “must have” items ahead of its competition. Yet, that requires constant creativity; refinements and a considerable amount of R&D. Apple is an example of a firm which has managed to hit both objectives. Not bad for an enterprise, which started life in a garage.
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