Monopoly of Control – Where does your business fit?
Normally when we hear the word monopoly, it conjures up images of that fateful game at Christmas time that nearly always ends in tears. But we’re not here to talk about that version of a monopoly, although the boardgame does provide a great analogy of monopoly control in business. Defined as a situation where there is one sole, dominant provider or producer who effectively controls the supply of a good or service.
Another way to explain the process is to look back at early cinema, where ‘Hollywood Majors’ dominated all aspects of film, from production to distribution and exhibition. They created the films, distributed them but remained in control by distributing carefully and to cinemas owned by themselves. Thus retaining any profit within the company.
What’s your USP?
There are a number of ways a company can achieve a monopoly of control. The first and foremost is the uniqueness of the product or service you provide to your customers. Essentially, do you have a clearly defined USP or (Unique Selling Point)?
You might ask, what does this principle of marketing have to do with controlling the market? Well, put simply the more unique you are as a business or product, the more you can charge your customers. If you provide a service that can’t be easily replicated by anyone else, then people will be less deterred by price. You want to avoid your product being a commodity where the rationale behind your customers purchases is simply price.
But this isn’t the only factor that allows a business to be a monopoly. Controlling your own supply chain can also greatly increase your control over profit margins too. If you are the supplier, then you can charge yourself a fee of your choosing for production.
The same goes for distribution. This process is known as vertical integration and gives you a great attribute of control over the selling price of your product. The more margin you have available the more you can invest in sales and marketing. Thus, the more you can continue to grow.
With size comes power
The larger your business becomes the more important your contracts become to your suppliers. If you are the only key player in the market you may be their only source of income. This eventually produces a domino effect that helps excel your business.
So, how can you improve your score in this key value driver?
Be meaningful to customers and appear different in the marketplace. Make your marketing campaigns concise and use them to play on your key strengths. Have you positioned your company in such a way that you can base your price on your value rather than like-for-like with your competitors? Often you’ll find customers are switching provider or brand based purely on price. This is why your USP needs to focus on wider selling benefits.
“By focusing on a key aspect, can a business become specialist rather than generalist? How this is accomplished will depend very much on the nature of the business. It is about finding and exploiting a niche and in doing so, offering something of value” notes Paul.
What’s more is that a company with a clear USP often receives offers which are 60% higher than those received by a company who’s marketing and sales strategy is focused on price. The clearer the USP, the easier it is to gain and maintain Monopoly Control.
For more information and to see where your business fits into the Monopoly Control score in our Value Builder, please contact us today in the strictest of confidence. Call 01606 535020.