Targeting The Mass Market
July 9, 2012 1 Comment
“Add something else of value to the deal but don’t negotiate on price”
“Target affluent customers who pay well.”
“Go for easy spenders not bargain hunters”
“Prices signal quality”
“Target high margin businesses”etc etc
Advice of the ilk is readily dished out to entrepreneurs today. Undoubtedly such advice has its place.But is this the only way to do business successfully?Read the story below and decide for yourself.
At the beginning of the 20th century the automobile was a plaything for the rich. Most models were complicated machines that required a chauffer conversant with its individual mechanical nuances to drive it. Henry Ford was determined to build a simple, reliable and affordable car; a car the average American worker could afford. Out of this determination came the Model T and the assembly line – two innovations that revolutionized American society and molded the world we live in today.
Henry Ford did not invent the car; he produced an automobile that was within the economic reach of the average American. While other manufacturers were content to target a market of the well-to-do, Ford developed a design and a method of manufacture that steadily reduced the cost of the Model T. Instead of pocketing the profits; Ford lowered the price of his car. As a result, Ford Motors sold more cars and steadily increased its earnings – transforming the automobile from a luxury toy to a mainstay of American society
The Model T made its debut in 1908 with a purchase price of $825.00. Over ten thousand were sold in its first year, establishing a new record. Four years later the price dropped to $575.00 and sales soared. By 1914, Ford could claim a 48% share of the automobile market.
Central to Ford’s ability to produce an affordable car was the development of the assembly line that increased the efficiency of manufacture and decreased its cost. Ford did not conceive the concept, he perfected it. Prior to the introduction of the assembly line, cars were individually crafted by teams of skilled workmen – a slow and expensive procedure. The assembly line reversed the process of automobile manufacture. Instead of workers going to the car, the car came to the worker who performed the same task of assembly over and over again. With the introduction and perfection of the process, Ford was able to reduce the assembly time of a Model T from twelve and a half hours to less six hours.
The assembly line is old hat today.But why not focus on other ways of delivering goods and services cheaply by focusing on efficiency rather than just cutting labour costs or compromising on the quality of materials used?Seriously how many of us today focus on thinking of new and better ways of doing things?How many of us remember that there is a potential market of 7 billion human begins not just 1 billion affluent ones?