Occasionally the question arises: “If we were to start a business from scratch in today’s environment – how would we do it?”

If we were to start a business that we thought required the internet (and in particular, online ad dollars) in order to be spread, there’s no question we would build a business that aims to deliver the Best for the Least for the Most.

Why hold so fast to such a seemingly narrow minded philosophy?

Perhaps this question is best answered by exploring the alternatives. Here are the adventures ahead for brands who deviate from this philosophy and instead choose to deliver …

1. The Average for the Least for the Least:

Product / Service: Average / Mass
Audience Reach: Least / Niche
Price / Profit: Least

This is the worst case scenario. By mere fact of having an average offering, such brands are penalised both by every online platforms’ organic and paid algorithms – making it very difficult and expensive for its messaging to be seen by any audience. Average products intended for ‘mass’ markets aren’t remarkable enough for a niche audience as they don’t solve any specific niche problems and therefore won’t get shared by the tribe – especially when compared to the global availability of niche products that do address the niche’s problems. Finally trying to sell at a low price typically means lower margins and opens such brands up to ‘race to the bottom’ competition – and in a globally connected marketplace there’s always someone, somewhere who has deeper pockets and is prepared to lose more than you to gain market share. Having the penalty of low margins with the additional threat of lower margins thanks to international competition, small niche market volume and unremarkable products is a triple lose-lose-lose and a slow road to death in a relationally Connected Economy.

Example Brands: Cleanskin wines, generic/copycat brands, dollar shops

2. The Average for the Least for the Most:

Product / Service: Average / Mass
Audience Reach: Least / Niche
Price / Profit: Most

This scenario is a bit better than the former, only in that since such brands are charging a high price, they can presumably pocket more cash to spend on their online marketing – which would be suffering the imposed algorithm cost per click penalties mentioned above. The fundamental problem here is that even with better marketing, socially connected niche audiences can see through average products – marketing will continuously be fighting an uphill battle as average products/services can’t take people on a journey of becoming for very long. Soon the person will outgrow the brand and such brands therefore need to continuously keep acquiring new customers – the most expensive type of customers to acquire. Back in the day such businesses could have made good Industrial businesses where relationship over time didn’t matter.

Example Brands: Blackberry

3. The Average for the Most for the Least:

Product / Service: Average / Mass
Audience Reach: Most / Mass
Price / Profit: Least / Cheapest

This scenario is the classic Industrial model. Create or source average products of universal appeal for the mass market, scale up marketing and manufacturing like crazy and sell for the lowest price. Sure it can still work for mega-brands but for the average small to medium business, the problem here is in targeting the ‘Most/Mass’ market – how do you do it in today’s infinitely fragmented online space? There *used* to be a way to do this before the web, when everyone used to watch the same TV shows, read the same newspapers and listen to the same drivetime radio stations. Reaching a mass market was easy and relatively cheap back then. Today, this is next to impossible and because of the multiples of digital channels available, is now an expensive exercise. This cost expense works against selling for the least price – unless you have the scale already to justify the expense. A chicken and egg scenario for newcomer brands.

Example Brands: Kmart, Aldi, McDonalds, Microsoft

4. The Average for the Most for the Most:

Product / Service: Average / Mass
Audience Reach: Most / Mass
Price / Profit: Most

This scenario at least now has the foundation of selling products at higher margins and thus recouping the extra cash required to offset trying to reach a Mass Market in today’s fragmented economy. The difficulty experienced here is now that we are in relationship with brands over time – why would anyone continuously pay top dollar for an average product that doesn’t solve a *very* specific need? Today we have options so the problem such brands will face is how to keep convincing this mass market that their average products are actually worth paying more for – especially when compared to niche competitors (who we become aware of now that we’re all connected) who also have similarly expensive products that *do* solve niche problems. For this reason, such brands will face customer churn issues – which must be continually propped up by more expensive mass marketing. The extra margins made by selling at such high cost will be absorbed by the added marketing burden – instead of going into company profits. Further such brands will eventually be eroded over time as niche of niche disruptors will continually attack – stealing market share as they solve specific problems that these average products won’t.

Example Brands: Gilette, Starbucks, Australia Post

5. The Best for the Least for the Least:

Product / Service: Best
Audience Reach: Least / Niche
Price / Profit: Least

Although a noble and admirable goal, such brands will likely be unable to last over the long haul as the combination of offering the best product/service (usually requiring heavy investment into R&D, tooling etc) isn’t being offset by selling enough volume (too small audience) and/or insufficient margin on each sale. Such brands also leave themselves open to global competition and once this happens, will be involved in an unsustainable race to the bottom on price. The saving grace for such brands is if they are able to stay relationally connected with their tribe (easy to do when offering the Best for the Least) via social/organic/earned rather than paid media. Such relational bonds are an effective high barrier to entry for competitors.

Example Brands: Linux, WordPress

6. The Best for the Most for the Least:

Product / Service: Best
Audience Reach: Most / Mass
Price / Profit: Least / Cheapest

Similar to the above, such brands also have a noble goal however their difficulty will be in facing the triple stress of attempting to offset heavy R&D investments to offer the best products, somehow do this at low cost and therefore low margin, yet still attempt to do this at scale to a digital mass market that is now difficult and expensive to reach. On top of that, such brands are also open to global competition and a race to the bottom. Such brands can attempt to use social to organically build strong relational ties with their audience, however since they are trying to reach a mass market, its difficult to form a tightknit tribe that actually care enough. A very noble, but difficult position to retain. In fact, this used to be the philosophy of legendary Herman Miller designers, Charles & Ray Eames, however Herman Miller themselves made the strategic quantum leap over the years to instead deliver the Best for the Least for the Most.

Example Brands: IKEA, Google, Facebook, Daiso, Dollar Shave Club

7. The Best for the Most for the Most:

Product / Service: Best
Audience Reach: Most / Mass
Price / Profit: Most

Admittedly this is the holy grail that only a handful of companies in the world will ever be able to get to – and is the only viable alternative to the Best for the Least for the Most. Here is a sustainable business model where the extra investment into continued excellence is supported by mass volume and high margins. Such brands have such clout they can practically do whatever they want. Unfortunately for the rest of us, this is a decades long path to take.

Example Brands: Apple, Lego, Disney, Star Wars, Pixar, Marvel, eBay, Coca-Cola

8. The Best for the Least for the Most:

Product / Service: Best
Audience Reach: Least / Niche
Price / Profit: Most

Here lies the sweet spot for the majority of brands today. Here the extra investment involved in offering the Best is offset by the additional margins made by selling the best to a niche tribe who are high on passion and prepared to pay for this privilege. The high passion of targeting a niche tribe is further supported by the organic relationships that can be formed with and between tribe members via social/earned media – either eliminating the need for paid advertising altogether or at the least, paying the least possible in paid advertising since the algorithms reward passionate, highly engaged followers. End result here is that even *more* margin is made per sale (thanks to the discount in paid advertising), further contributing to the virtuous upward spiral of profitability for such brands. The extra profits allow such brands to continue taking risks and supporting artistic and leadership collaborations, further surprising and delighting followers and enabling a long term ‘journey of becoming’ over time. The challenge for such brands is in targeting the ‘right’ level of niche – too small and the brand may not be able to climb the rungs to sustainability.

Example Brands: AirBnB, Uber, Xero, Aesop, Dyson, Adobe, RM Williams, The Financial Review

Above we’ve outlined 8 potential adventures facing any brand looking to win online in our Connection Economy.

If you have the pockets to deliver the Best for the Most for the Most, then by all means go for it.

For the rest of us, the most future-proof, long term path to choose is to deliver the Best for the Least for the Most.

[Long Read] How to design a business from scratch today
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About Adam Sugihto

Founder of Intentional - a specialist Pay Per Click Advertising Agency based in Melbourne, Australia. Member of Perry Marshall's Marketing Mastermind since 2011. Google Adwords Qualified Individual since 2010.

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Connection Economics