Slaying the GIANT

If you are not already a small business, imagine what it is like being a small business facing a competitor’s product as a bottom tier brand, so small you literally have no marketing budget. Now, your job is to go out there and take down the giant. Impossible right? Well, as I am learning first hand as a small business myself there is a limit to how much money you can put behind a product. As a services provider and an IT company it is difficult for us to really quantify how much of a discount to advertise to customers. Deep discounts for services or a subscription to our product “Localvore” cannot really be measured by how much profit we will take from a competitor or how much a competitor will cut their price to compete with us. However, for our customers that use Localvore we can measure it. For a local supplier that currently sells meat, produce, or vegetables at 4 or more times the cost of food that is imported from another country or mass produced in the mid-west United States through Localvore it is possible to get products discounted deep enough that one of two things will happen. Either other “imported” products would not be restocked on the shelves of retailers or the “global corporations” would have to put up so much money behind one brand that it would take money away from other brands they support to compete against locals suppliers. Either way it is a win-win for Localvore users. By my estimates as an Economist I believe that early adopters of the Localvore application can reduce prices by at least 30% from their current levels. This can be made possible through the expectations that suppliers will make up for the difference in price through volumes of sales. Alternatively, global corporations could not compete against local suppliers because factoring in the cost of energy, inflation, and diminishing profit margins realized by the retailers they sell to global corporate suppliers could not afford to cut prices by more than 5 to 10%. If you are a supplier out there and your jaw just hit the floor I understand. However, think about it. In this case the giants out there cannot win and you cannot lose. Local suppliers must understand the following lessons: 1. Do not focus on the size of your budget, think about how much leverage you have. 2. Do not try to compete with global corporations on how much you spend on marketing. Do, however, try to compete on pain thresholds. 3. Global corporations have to worry about business decisions across many different products they support. Local suppliers have the ability to focus on one or only a few of their core products. As such, global corporations’ business decisions have far reaching consequences across all brands and supply chain channels. A local supplier with a good product and good discount can threaten even the largest giants putting more than just a small portion of their product line at risk. We at Economic Technology Systems can help you slay the giant and we want to help you. Not because we want to damage global trade, but we want to do a lot of good for our local economies here at home. This is not a strategy for every business but it does give you a reason to look for areas where you might have an advantage. If one giant can be slayed we can achieve sweet victory.