As they say, competing on price in commodotized markets is a race to the bottom. Scale and distribution are the only two things that can save you there.
But what if you’re neither a behemoth nor do you have Amazon or FedEx’s distribution expertise?
You can do one of two things, as illustrated by Adam Davidson in his NYT piece on American brush-makers and Chinese competition:
1. Compete on quality
(Bronx Paintbrush Factory Owner: Israel) Kirschner hasn’t changed a thing. He makes brushes the very same way, employing many of the same machines, that his father did 50 years ago. He told me that he sticks with the old ways because, unlike with toys and T-shirts, a big chunk of the brush business caters to professionals who aren’t merely shopping for price but rather for quality. Michael Wolf, who runs the Greco Brush Company, a supplier to professional house painters, told me that his customers need to know before each job that every single bristle on every single brush will be attached properly. One loose fiber left on a wall can damage a painter’s reputation, which in turn can hurt Wolf’s too. Wolf said that he can buy brushes for between a quarter and a dollar cheaper in China, but he is never sure exactly what he’ll get. Some orders are shoddy; others never arrive. So Greco sticks with the company he knows. “My father did business with his father back in the ’50s,” Wolf told me. “We’re keeping it going, the two of us.”
2. Compete with non-stop innovation
At the other end of the business is Lance Cheney, 53, the fourth-generation president of Braun Brush, who told me that he would close his company rather than make the same kind of brush, the same way, for 50 years. He is constantly creating innovative brushes so that he never has any competition. Cheney makes a beaver-hair brush that’s solely for putting a sheen on chocolate. He sells an industrial croissant-buttering brush and a heat-resistant brush that can clean hot deep fryers. His clients, he said, now include General Mills (he made a brush for their cereal-manufacturing line) and the energy industry (a line of expensive brushes for cleaning pipes in nuclear reactors). He even developed Brush Tile, fuzzy panels used in artistic wall hangings. He said his proudest creation is a tiny brush that helped Mars rovers dust debris from drilling sites. When Cheney sees other firms making one of his brushes, he often drops the product rather than enter a price war. Braun Brush, he said, has grown at 15 to 20 percent annually for the past five years.
PS: Of course, not every industry has conditions that allow for (1). If the primary users of paint-brushes were amateurs who didn’t care for quality, that strategy wouldn’t fly. And if this category didn’t support or need innovation (for example, if this was about can openers…), (2) wouldn’t work. Another reason why competitive strategies can’t be indiscriminately used without understanding customer needs. But then again, you already knew that…