June 11, 2007
The Generalist vs. The Specialist
Once upon a time there were three businesses. They sold the same types of products in the same geographic area. But there were big differences in the way they presented themselves to their prospects.
One positioned himself as the “high price / high quality / high personal service” vendor. His company became known as the expert in the selected market niche of satisfying customers who liked feeling extra-special and were willing to pay for it. He dominated that portion of the marketplace while repelling the customer who was looking for bargains.
The second business was positioned as the “low price supplier” offering limited service, limited selection, and “Low, Low, One-Time-Only-Discount-Pricing.” The company specialized in the highly promotional end of the market and they dominated it. If you wanted first-class service and amenities you went elsewhere. If you wanted “cheap” or even the perception of “cheap” this is the place you went.
The third business attempted to be “all things to all people.” They carried product in all price ranges, size and color choices with some services and amenities, but business was slow and carrying all that inventory was expensive.
Today there are just two businesses. Both are growing and profitable. They both specialize in their selected market niche and are very good at satisfying their customers by offering the selection, style, value, and service those customers want and are willing to pay for. They both dominate their end of the marketplace and compete against each other for the “middle market.”
The “all things to all people” generalist lost out because they couldn’t afford to compete at the high-end with high expenses to hold slow moving inventory, exclusive services, and the trappings of luxury and they could not compete for the low-end of the market where they would have had to increase volume, promote more heavily, and accept lower margins. They kept being whipsawed between the demands of the customers who preferred to purchase from the company that specialized in the market niche that appealed to them.
Larry Galler.
Write to Larry on larry@larrygaller.com.
