Waterhole strategy

Currently in many segments of market, companies compete each other especially in the internet. Entrepreneurs do not create guides in form of printing materials. When they want to be distinguishing, they fight for a position in Google website on each phase. A battlefield between companies, especially from small and medium companies section, but not only, moved to the Internet. You lead your business, you have your own website, and maybe you have also next website www – your own, key product. On each of them you describe yourself, your product or brand. You write the history of your success, you describe implementations of your products into your customers. Simply you boast and authenticate yourself. You do this because your competitions do the same – this closer and this further competition.

Most of tires producers at the turn of XIX and XX century focused on creation of new products: tires, which will accomplish increase and variable customers need. André Michelin found Michelin`s guide, that is waterhole, which not only his customers need, but also all target group of people, who use products of tiers branch. When you want to understand, what André Michelin found over the years, through Michelin`s guide, imagine waterhole which is described above. André Michelin could go out from his desert and he found waterhole. He created new segment of market: people who travel by car on big distances. It is appropriate, pronounced group. Michelin `involved` many places to his idea, because he promoted selected car repair services, restaurants, hotels. Customers who used the guide got to these places. So in these places customers met and communicated. In this way they created community.

You have led your business for several years. For sure you see that in many disciplines costs of entering to market (including also your market) are lower and lower. The time which is indispensable to lead a company is also shorter and shorter. Your money which is needed to run the business in your branch is lower and lower. Technical progress accelerates and allows offering more advanced products. You see, that also in your branch, as in many different branches, supply significantly dominate on demand. An additional globalization and international contracts cause deteriorate of barriers. They facilitates your competition, even from far countries, compete on local markets. In consequence products undergo commoditization. Through mass competition the products of different companies become to be more similar to each other. The consequence of products commoditization is decrease of markups and standardizing of market offer. From customers point of view products of different companies become to be similar each other, they loss unique features, uniqueness. If you want sell products in this kind of market, you have to decrease your prices. Reduction of prices inevitably leads to generate by companies lower markups and destroy the market. Commoditization of products is particularly strongly visible for instance on IT services market, accounting services, legal services, SaaS applications and clothes or shoes.

Now, when you are seeing all waterhole strategy, think and compare. How much time and how many resources do my competition need, to copy your waterhole, and how many resources to copy your www website. The answer is simple. When you create waterhole you gain huge, hard to copy (on account of time) competitive advantage. Copy your own waterhole requires from your competition much time which is counting in years. When you realize waterhole strategy you gain access to select available only by your own market segment through creation of community based on values, which are important for it, and not on features and brand. You gain important property on the market.