Duncan Checks in On Strategy

On Sep 26, 2008, at 9:01 AM, Duncan wrote:

Hi John,

In relation to a product I'm about to start working on I remembered your anecdote in the videos about the cordless phone and how it went straight to commodity. The fact that everyone wanted a cordless phone was the reason (although I'm not arrogant enough to believe everyone will want my product, heh). My idea is an improvement to napkins. But I'm concerned that with such a commoditized product and so many companies set up to produce big volumes at low prices, and being a product that anyone uses, that it would easily be copied. And therefore there would be few reorders. What's your view on this? And also, do you think that such a low priced product is suited to small business? I know you say let the customers decide but I couldn't see being able to charge more than triple the price of normal napkins. That means I'd need to move a high volume in order to make this deal work (workable amount of time, profitably).

In the vein of the woman who came to you with a new idea, I've just read how it's possible to hire mechanical engineers or industrial designers on eLance

Thanks and have a great weekend, Duncs.

Sure, there are plenty of businesses selling low priced items, but the items are high profit...specialty... designer paper clips... but too small for big price competitors to bother with...

Well, here are lunch bags that cost 2 cents a piece and the the profit is 10%, there are lunch bags that are covered in lacquer coating and cost 8 cents a piece and the profit is 70%. You get paid for the value you provide in the market. I would guess that indeed, it would be difficult to earn a living not doing very much, certainly less than you are capable... if you had paper bags as your product, I imagine you'd have to have 2 or 300 other products to have a line and a viable business. It is not uncommon for small businesses to have several, if not hundreds of items...

John

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