You can grow your business by competing with other businesses in your industry to sell more of your product or service. However, bigger businesses are usually better at competing to get a bigger share of customers. For example, a big business can order more units of stock at a lower cost. They can then pass these savings on to the customer and offer a lower price. If you choose to compete in this way, you run the risk that your product or service becomes standardised, and potential for profits and growth are reduced.

If you own a smaller business, you’ll probably have more success responding nimbly to customers’ changing demands and tastes. Some companies have created new demand by forming whole new industries, like Trade Me in the online auction industry. However, a more realistic and achievable way to create demand is to create new space in an existing industry.

To create new space, you need to find out what your customers like about your product or service. How could you do things differently to make your product or service attractive to new customers? If your business is small, you can change course faster than a big business, helping you capture more of the new demand.

Here are four steps to help you create your own space in the market.

Think about a product, service or mix you provide. Identify the elements that provide value to your customers. Think about whether your product has any service elements, or whether your service has any product elements. You might identify opportunities to add new value and create a new space for your business in the market. Write them down in your strategy planning worksheet.

Think about how to increase the value of your product to your customers and reduce costs at the same time. Finding your own part of the market is about more than doing things. It’s also about focusing better on your value by getting rid of the cost of things that don’t contribute to that value. For example, bulk discounts might be the norm in your bike parts manufacturing business. If you identify a demand for a good bike repair in your city, you could move away from bulk discounts. You save space in your store and use the space for a bike service centre instead.

If you compete head-on with your competitors, you have to make a trade-off between performance and price. By creating a new space, you can enjoy a niche without those trade-offs. Customers are often happy to pay premium prices for simple but unique products.

When you look for ways to increase the value of your product or service, most changes fit into one of four categories. Try one of these tactics if you’re having trouble getting started. Got an idea already? Reflect on where it fits, and record it in the strategy planning worksheet.

Get rid of something

Think about what you could eliminate in your product or service. Even consider eliminating things your industry has relied on to create competition. For example, you might remove your long and varied restaurant menu and promote a fresh new ‘dish of the day’ — with just a few choices to meet dietary needs. A shorter menu saves you costs and preparation time. It also saves your customers time in choosing and waiting. Some people may be turned away by fewer options. But you’d get new support from others who want fresh, high-quality food at a lower price with faster service.

Do something better

Consider the things about your product or service you could do much better than your competitors. For example, if you offer a pet-sitting service, you might let each owner know how their pet is doing during the day. You could send a message and photo in the morning and evening, or even offer a video call. These extras help establish trust with your customers.

Add something new

Think about what you could create in your product or service that the industry has never offered. For example, let’s say you own a car workshop in the city where most customers leave their vehicle to be fixed during their workday. You could offer customers a free public transport ticket. Or you could drop their car off at their office at the end of the day. You’re offering something new that enhances a customer’s experience in an unexpected way.

Downgrade something

Consider the things about your product you could reduce well below the industry standard. For example, let’s say you typically provide customer service via a call centre. If you’ve increased your social media presence and engagement, you could ask your customers to use those social media channels for enquiries. You’d reduce your call-centre costs while still providing acceptable service.

Check your locations

Review the locations you chose when you started selling online. Check whether anything has changed, and how various locations are performing. Consider whether to add new locations, or move away from old ones.

Choose where to sell

You might sell on your own website, a shared marketplace like Trade Me, or both. Using one location can work well, but consider extending to others to be available to more customers. It’s common for businesses that start on a shared marketplace to later create their own website. The changes is like setting up your own shop after having your products stocked in other retailers’ stores. Having your own website saves on commission costs, and offers better control of the shopping and brand experience. 

Review where your customers are in relation to your physical operations. They may be nearby or too far away for quick delivery. They may be in the same country or overseas. Think about how you can improve operations or customer support. 

If you started out online-only, you might benefit from adding a physical location. This could offer a better brand experience, boost sales in a particular spot, or improve trust because customers can experience your products in person.

Alternatively, if your physical store is not profitable, it might make sense to mostly focus on selling online.

Diagram with title “Creating new space”. Shows a graph with price, speed, service, taste, and a new category social value on the X-axis and low to high on the Y-axis. Two lines with a value for each item on the X-axis represent two products or services. One line represents you, the other represents your competitor. The values are similar in 4 categories but for the new category you score higher than your competitor. This difference represents your advantage – the new space you have created in the market.

Adding a new feature, ethical sourcing, creates new space so you have an overall advantage.

Now you’re doing a better job overall, even though most of your characteristics have stayed more or less the same. By ethically sourcing your products and catering to your customers’ needs in this area, you’ve added value and separated yourself from your competitor.

What characteristics does your industry tend to compete on? How do you compare? What new feature could help you stand out? Use the strategy planning worksheet to explore your opportunities.

Remember that to deliver your new value, you may need to adjust value in other areas of your business. For example, could you reduce costs by downgrading or getting rid of something that your customers don’t really need?