Every seller can quickly answer the question of what they are selling. It’s obvious, after all. “I sell pots” or “I sell air conditioners.” You might hear responses like “I sell comprehensive solutions in the field of…”.
Moreover, salespeople, trained in sales techniques, proudly claim that they sell themselves. However, they often overlook the fact that the buyer cannot try the product before purchasing it, which means they will be guided by irrational motives. And where there is no rationality, there is always room for deception. After this, we wonder why salespeople are not trusted and why it is so difficult for them to earn that trust. After all, throughout the history of sales, those who believed a salesperson just on their word have become as extinct as dinosaurs.
The correct answer to the question “What do we sell?” is fundamental to the operations of any company and to the economy as a whole. However, a quick response is often not accurate: people think they are selling just a product—something similar to what competitors offer. “But at 10% less!” Unfortunately, such answers do not promise much success. Here’s why. In economics, there is a concept known as perfect competition. This is a non-existent mathematical model that helps to understand the workings of important economic laws. Perfect competition is an idealized state of the market where individual buyers and sellers cannot influence the price but contribute to it through their demand and supply. In other words, a seller does not set their own price for a product; they sell it at the market price. They cannot charge a higher price (as the product simply won’t sell) or a lower price (as they would incur losses).
A situation similar to the one described above is possible: when the product is the same for everyone, anyone can enter and exit the market, all market participants have equal access to information about product prices, and the costs of acquiring the product (transportation and overhead expenses) are so low that they can be ignored. Under these conditions, the buyer will choose the cheaper option, and only companies that can offer the lowest price will remain in the market. However, by offering this low price, sellers find themselves in a situation where they stop making economic profits. In economics, unlike in accounting, gross costs also include the entrepreneur’s income, which incentivizes them to stay in the market. For example, if an entrepreneur suddenly realizes that they can sell their business, deposit the proceeds in a bank for interest, and comfortably receive rental income equal to their entrepreneurial income, they will do just that. They do not want the headaches and business risks associated with running a business, especially in a competitive environment with a tax burden.
Of course, from an accounting perspective, such a business is profitable. However, from an economic standpoint, a business whose accounting profit equals the rental income from a deposit is already on the brink of being unprofitable and does not generate any economic profit.
If a business is not generating economic profit, it means… it is not selling anything. After all, sales have always been the source of profit. In other words, if you are selling the same thing as your competitor, you are not selling anything. The answer to the question “What are we selling?” should be unique, different from what your competitor would say.
During my work, as I consulted numerous companies from various industries, I found that most of my clients struggled to clearly and precisely answer the question, “What do we sell?” in a way that was unique to them and not applicable to a dozen similar firms. It often turned out that the company’s management simply needed to sit down and think about what exactly they were selling, so that other questions related to development or sales strategies could be resolved clearly and logically.
If we look at the market through the eyes of an economist, it becomes clear that a firm can only make a profit through something in which it holds a monopoly or something that competitors are unable to provide for the same price. This is the key distinction between the offerings of a specific firm and those of its competitors. All pharmacies sell medications, but each one is convenient only for a certain group of customers. All car dealerships offer vehicles, but each individual chooses one dealership based on their own considerations, seeing specific advantages in the one they select. The price of the product rarely plays a decisive role. Not many people base their purchasing decisions solely on the price of an item. Often, these advantages are quite mundane—proximity, personal connections, convenience, appearance, and so on. But even more often, these benefits are not even recognized by the sellers, even though it is precisely this “something” that allows companies to stand out in the flat landscape of a competitive market, as featureless as the bottom of a dried-up salt lake. And it is this that provides companies with the economic profit that exceeds the income from a deposit equal to the value of the company.
Once, there was an article in the newspapers about a chicken that runs like… penguin The owners claimed they would never make soup out of her. And from the chicken’s perspective, that’s a complete success! If you want to avoid being “made into soup,” you need to learn how to stand out from the crowd. It doesn’t matter so much whether it’s received well or poorly. The point is to be special. Cheese with mold is essentially spoiled, but that’s exactly what draws attention to it. Don’t be afraid of being “spoiled”; be afraid of being just like everyone else. And if you aren’t afraid of the potential downsides of your own uniqueness, you’ll achieve something good.
The main secret is that in this flat world, it’s enough to be just a small hill or a bump to find a sufficient number of fans among the entire population of the country. Imagine that you start offering a service or product that will be categorically rejected by 95% of the population for reasons unrelated to quality or usability. Yet, at the same time, 5% of the population will fall in love with your product and will be “pulling” it from you. Compare this to a situation where you are just one of 100 or 1000 producers of a standard product that is in demand by 95% of the population. What market share can you expect under equal conditions? Will you be able to compete on equal footing with the giants that exploit economies of scale and huge advertising budgets? Will anyone be “pulling” your product or service from you? No, you will have to “push” it. By the way, it’s always easier to pull than to push, and there’s a belief that this is why most cars today are front-wheel drive.