Business Competitive Advantage: The Problem With Being Too Unique
I'm a big fan of the History Channel shows, American Pickers and Pawn Stars. One of the most interesting and entertaining aspects of the shows for me is watching how sellers value the unique (or not so unique) items they're offering for sale to the shows' stars.
Usually, a deal doesn't get done because:
- Seller is emotionally attached to the item and is setting the price based on the unique emotional value it has for them.
- Sellers have seen something "for sale on the Internet" and believe that someone else's asking price is the price they will get.
- Sellers don't realize they are selling for resale. Except in rare instances, the shows' stars are only purchasing items to sell again to others and they must make a profit.
- Sellers have an extremely rare item and equate rarity with value and price.
So what does this have to do with sales and pricing strategies in marketing? Everything! And most of these deal breakers have to do with managing an offering's uniqueness and competitive advantage. Let's see how.
In a perfect world, sellers would price their offerings considering reasonable profit margins and realistic sales forecasts. But, like some of the clueless sellers on these shows, many entrepreneurs and small business owners are in love with the product or service they offer and their outrageous prices reflect it. They believe that what they offer is so unique that surely it can command the prices they set. Plus, often what they are selling is really not unique because they haven't done their research homework.
- Know the Market and Competition. While setting prices based on competitors can be deadly to small businesses especially, knowing what people are paying for similar or nearly similar products and services can be helpful in setting realistic, realizable prices for the target market demographic.
"Saw It on the Internet" Pricing
These sellers are almost the opposite of the emotional sellers. They've "sort of" done their homework and at least did some searching to see what their item might be worth. But they might be comparing their item with a highly collectible, mint condition version of it. They think their item is as unique as some of the highest priced ones on eBay. Or they might be looking at the selling price or value from a time when the market for it was booming.
- Apples to Apples... and then to Oranges. Know how your product or service stacks up to what is currently for sale in the marketplace. Then realize what unique qualities can be capitalized upon.
Sale or Resale?
Inexperienced sellers featured on these shows can also get tripped up by asking for a "retail" price from the shows' stars. They forget that these folks are buying to resell the items. Even funnier is when these sellers try to convince the buyers that they'll "get a lot of money" because the item so unique. Really? The shows' stars deal in these markets all day, every day. They have a good pulse on what's in the marketplace and what's moving.
- Know Your Buyer and Why They're Buying. Why is a buyer even considering buying what's for sale? Personal use? Resale? Pricing and selling for the wrong purpose can make a seller appear inexperienced or uninformed, neither of which increase the chances of a sale.
- Understand What's Realistic for the Market. Don't set blue sky sales prices based on an item's erroneously perceived rarity or uniqueness.
The Rare Factor
Celebrity signatures? Items with historic value? Products that are no longer being made? They all could be very rare. But the big question is "Does it have a market?"
Regardless of how rare or unique an item is, if there are no ready, willing and able buyers for it, the item will not sell, even if it technically has value.
Similarly, small business owners can often get tripped up by trying to offer the most rare and unique product or service on the market. Example: "We're the only ones making glow-in-the-dark pasta." Oooookay. Never heard of glow-in-the-dark pasta and don't think we ever will. Yes, it's rare. But a situation where that would be a desirable product is also rare, if not non-existent.
Another point is the difference between rarity and uniqueness. Rarity usually means that there is a limited supply. Uniqueness means that it is different from other offerings. A product or service can be either or both. But rarity and uniqueness do not always equal sale-ability.
- Understand the Difference Between Being Unique and Being Marketable. One can sing the "I'm Unique and/or Rare" song all day long. But if the market doesn't desire or care about that difference, then sales will be very difficult.
- Do Realistic Profit and Loss and Sales Forecasts. Unique and rare products and services may have limited appeal and markets... as well as limited sales. Forecast and budget accordingly.
Disclaimer: Any examples used are for illustrative purposes only and do not suggest affiliation or endorsement. The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.
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© 2014 Heidi Thorne