When you peel away all the wrapping, there are just 3 basic strategies for small business to dominate a market locally, nationally or globally:

1 – Be the cheapest

2 – Be the best

3 – Be different

Think about it – what else can you do to distinguish yourself from your competition apart from being cheaper, better or different?  Just make sure your marketing communicates it properly.

Let’s take each of these in turn so that you can find out which is the smart way to go…

Be The Cheapest In Your Market

A very popular startup strategy for small businesses is to keep your prices low to attract customers in.  The problem is that these are normally the kind of customers who hate to pay a fair price for your service, who complain about the service and then return goods after they’ve used them for a night.

After dealing with difficult customers, you then find a big multi-national company has decided to enter the same market as you and is producing your goods for half the price in their factory in China.

Not only this, but you end up working very hard to earn a tiny profit.  Every time something goes wrong, because you are keeping costs down for your customers, you will lose a big lump of your profit.

People who run a small business trying to be cheap, or trying "to be fair" with their pricing are always complaining about money one way or another.

Pretty soon this kind of business starts to wear you down – it’s a long-days and low-profits approach.

Being The Best In Your Market

You can be the best at something very specific, but be careful that you don’t try to be the best in too broad a market.  For example, you could choose to be the best Italian seafood restaurant in London.  It’s a small enough niche for you to become brilliant at it and to earn recognition for your dishes.

Within London there would be plenty enough customers to beat a path to your door every night and for you to charge premium prices.  Just remember that there will always be competitors trying to beat you though, copying your success.

On the other hand if you want to be the best restaurant in London, you’re going to have some really tough competition.  Many great chefs have restaurants there and you’ll have a continual battle to get to the top and stay there.

Or you could be the fastest pizza delivery company for 5 miles around Cambridge.  Imagine the problems that people have every day with companies and then do what they do, better. 

Again, you can be out-muscled when a competitor brings out a better product because they have more budget for R&D.

So for service, being the best is a great goal, but if you want to produce products, be very careful about aiming to be the best.

Be Different, Beat A Unique Path To Profit

Instead of trying to be the cheapest or the best small business, you can choose to be unique instead.  By being different, you are differentiated with something else instead of price or quality.

Most SME’s struggle with this because they find it hard to figure out how to be different.  Purple Cow by Seth Godin talks at length about making your business different – turning it into a "purple cow" in a field of ordinary dairy cows.

Warning!  Do Not Enter…

One final note of caution –  just because you’ve got something different doesn’t mean that you will be able to win customers away from the established market leader. 

Just look at the number of times people have launched competing Cola drinks and still Coca Cola is number 1 and Pepsi number 2.  Those figures will hold up to almost any challenge from a new young pretender to the cola crown. 

Virgin Cola made a big splash and then disappeared from the shelves of shops I go into.  Even Sir Richard Branson isn’t immune to the fact that beating an established market leader is notoriously difficult.