How to defend your market

Wouldn’t it be nice if you had the market all to yourself. Imagine life without competitors. There are companies who have that luxury although many of them are state owned or regulated. Companies with unique solutions strongly protected by patents do tend to avoid competitors, but few of us are in that fortunate position. For the vast majority of us, we need to live with the threat of competitors outmanoeuvring us everyday. What we need to do is to find some effective, but legal, techniques to limit or avoid competitors. One such technique is what I call ‘owning the point of purchase’.

Basically, if yours is the only store in town you effectively have a monopoly, but most of us aren’t in the retail store business. However, there is no reason not to ride on the back of such a store. What if yours is the only product in your category offered in that store – you too now have an effective monopoly.

This latter technique is used to a greater or lesser extent by large numbers of consumer packaged goods manufacturers to own the point of purchase. If they can secure an agreement with the retail store to exclude their competitors, or maybe just place them away from the traffic, they have created a point of purchase advantage.

If you start with the most logical place where customers buy your product, you can begin working on a plan to gain greater influence over the purchase. In some cases, there will be little which you can do, but other times, you may have some influence over the products being offered. Where you can have some influence, perhaps by offering additional incentives to the owner of the purchase location, you gain greater control over your potential sales.

You need to list out all the different ways in which customers arrive at the purchase decision, then examine each one to see what opportunities you have to limit exposure to competitor offerings. Another possibility is to link your product or service to products or services which drive the main purchase decision. Thus a travel insurance product might be linked to a package holiday. While you don’t control the choice of holiday package purchased, you might be able to have your travel insurance as the only one offered alongside the package. Few customers would be bothered to look elsewhere if the marginal cost was small compared to the time it would take to look elsewhere.

We sometimes forget that customers incur product search and evaluation time and expenses in solving a problem or meeting a need. Those products which are easiest to find are presented where they shop normally, or are associated with another purchase which they are making. Identifying the point of purchase of your product and those which are complementary to it is the starting point in identifying opportunities to have a greater influence over what is purchased. The ideal situation is to be the only solution and ‘own the point of purchase’.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.