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If You Can Differentiate, You Have a Competitive Monopoly

If You Can Differentiate, You Have a Competitive Monopoly

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In the article, The Strategy Accelerator, Alfred Griffioen shares his thoughts on competitive monopoly and how the only way outperform your competitors is through differentiation.

Griffioen writes:

“The question "how to be successful in the market" is among the most relevant for business economics, but only a few researchers and authors have formulated directive rather than descriptive answers.  A better direction can be found in basic economy researchers: if you can differentiate yourself from the competitors, you have a sort of monopoly.  In a monopoly you can choose your own price and quantity optimum on the demand curve.  As soon as you encounter competitors, the power shifts to the customer: the price is set by the market and you can only follow.  The only way outperform your competitors is through differentiation.”

I think Griffioen raises some good points and the best way to differentiate is by building a better brand for whoever you serve.

  • I don't see anything remarkably new in this comment. "if you can differentiate yourself from the competitors" is in itself a descriptive and not a directive statement.

    By describing, what you don't and what you want to be you actually give, i.e. describe, direction (see imperative and declarative programming). Furthermore, what type of differentiation do you want to achieve? Does this differentiation matter to someone, e.g. just because your service is cheaper does not mean it is better - reading, differentiation achieved but maybe not translate into monopoly.

    Also, in a world where you compete with respect to pricing (as a differentiator) you may be in a downward spiral. Actually, there is probably no equal product, however the differentiation points may be marginal or unimportant, in which case they will probably not lead to anything monopolistic.

  • @ Christian -- Good points.

    You hit the heart of the point.  Griffioen says it's more effective to differentiate through unique and relevant value, than to play the cheaper game.  It's more of a swim in the blue ocean approach, than fight in the red ocean.

    I think what he's hitting is that the cycles of change are shorter, so the price rationalization happens faster, meaning you lose your edge fast, if that's all you've got.

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