Due to the turbulence of the current economy, businesses today are having to adapt to constant market shifts. The businesses that adapt best to this “new normal” will thrive as the market improves over the coming years.
Every market changes, but some change faster than others. For example, the iron ore industry moves much slower than the high tech or publishing industry. Established franchises can disappear if they fail to see, accept and respond to market changes. Microsoft were slow to respond to the rise of tablet computing, and cannot compete on price in the cloud sector of the market. Many magazines have been slow to respond to the web and the growing popularity of tablets such as the iPad. However it is interesting that most major IT and technology magazines went 100% digital well ahead of other titles.
So, the market is changing and the economy is turbulent. As a business owner or manager, what can and what should you be doing in the current business environment?
Two indicators exist to tell you when a trend is undeniable and will change your industry. The first is simple – good old fashioned economics. Monitoring supply and demand for products or services over time will allow you to spot trends in the market. If you can adapt in order to create a value proposition which appeals to the consumers who are driving the market trend, you could create a niche for your business.
The other indicator is customer preference. It doesn’t matter if the value proposition of one product is better than a competing product if the customer doesn’t want it. A good example here is digital music players. There are plenty of music players on the market that are far superior to the iPod. However, the majority of customers prefer the iPod; not because it is cheaper, better or offers great value, but because the brand is seen as “cool” and the device benefits from customer preference.
In summary, business owners and managers need to recognise changing trends in their respective markets and then respond effectively within an appropriate timeframe. The cost of adapting your business is a risk, as no market manoeuver is free. However, costs can be projected and risks can be managed. The risk associated with being at the head of the pack is far less than the risk of being left behind if you fail to adapt to market changes at all.