THE THIRD MARKET
In a changing world, retailers have a choice. Set nets for the
well-heeled who are fussy, demand top service and want the best... where
the highest per individual sale profit resides. The is the First Market.
The alternative? Deal on price to that segment of the economy that makes
most decisions on price alone. That's the Second Market.
Today there is a new kid at the counter. The Third Market, better
known as The Entrepreneurial Movement. It might yet save America.
SUCCESS magazine says that is a distinct possibility.
Where do you find this cat? In times when large companies are
shrinking like cheap shirts and laying off staff, when such giants don't
know how or where to move, or how to play the much faster business game
why are there still one million small American companies growing at an
annual rate of 15 percent!
According to SUCCESS magazine "that is only five percent of the 20
million business tax returns filed annually". How have the huge
companies, which once had all those markets tied-up, gotten into such a
fix? What have they to offer now, when all their executives who have
spent their lives in learning to play business/baseball, have anything
to offer but the same old, worn-out products and poor service? Why can't
they learn the new, much faster game of business/jai alai? The same
reason an elephant with arthritis can't out-run a gazelle.
That's not all. These small companies are producing 44 percent of all
business-to-business sales according to a report prepared for Wilson L.
Harrell, former publisher of INC. magazine. Eighty percent of all new
jobs created during the past decade have come through the actions of
these entrepreneurial companies. Some have grown at lightning speed.
And, because with products and services for the Information Age there is
often little no relationship between cost and selling price, profit
margins are bordering on the magnificent.
In the software field once development costs have been covered, the
actual cost of reproducing software copies, whether on computer
programs, disc books, CD-ROM or audio and video tapes, resides in the
minimal wholesale costs of a disc, (19 to 35 cents), a tape (50 cents to
$10.), packaging (50 cents to $5.). Retail price can run from $20 to
$5,000, depending on what the product can do for you. Almost always the
product is price INsensitive. Usually better, quicker and for less than
whatever it is replacing did in the past. People, at least for now, are
so impressed with comparisons with the past (computer vs. typewriter,
software vs. hardware, ultra-compactness vs. bulk, speed vs. snail mail,
brain power vs. muscle power), that price, once consumers understand
what the new product or service can do, becomes a fourth or fifth
Will some larger companies see the writing on the screen and follow
the leaders, who are relatively small, to success? The General Business
Systems Division of AT&T is converting some of its branches into
franchises! IBM, admittedly belatedly, chopped a fifth of its Canadian
operation and 100,000 from its staff world-wide to survive. Not only is
IBM now a much better company, they provide better service.
These are not isolated cases. It is happening everywhere.
Globalization means competition can come from anywhere -- and
everywhere. Like it or not, it's the "sense of urgency" that drives the
successful... here or in Kuala Lampur.
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