List of 4 strategies to get started in a locked market

List of 4 strategies to get started in a locked market

Business creation: 4 strategies to get started in a locked market

Are you building a business in a market full of possessive and/or symbolic players and you're worried about not making your place? Here is an overview of the main strategies used to turn this situation to your advantage.

These markets, which we would like to qualify here as locked because of the large fees to enter them, can stagnate. Examples of its success are numerous, from Ornikar knowing how to rush into breaking the law to launch its online licensing program to Louboutin which differentiates itself from its competitors with its red sole, the unique design that is its brand.

Innovation is always the key to stand out. Whether a bonus or a nuisance, here are 4 strategies to help you better master your customer targeting and offer positioning.

#1. Niche strategy: target limited clients

"Small thumbs don't want to hit leaders head-on," explains Philippe Silberzahn, professor of strategy and entrepreneurship at EM Lyon. Outsiders often target very specialized customers, ignored by traditional market players.

Heetch, for example, chose, when it launched in 2013, to target young urbanites who had just returned from the event. The VTC market was then monopolized by Uber, but the costs discouraged students and young professionals. Heetch after that concentrates on this client only. At that time, the service could only be accessed at night and on weekends. After a legal setback, the French start-up left this niche in 2017. Heetch is currently targeting a wider audience with speeches about the remuneration of its drivers, whose 15% commission for races is presented as the lowest on the market.

Recognizing dissatisfied customers was still an option for Hélène Jaouen when she founded LNLM, a gear shop for female motorcyclists in Paris. “When I started this adventure 15 years ago, there were very few options for women in traditional shops,” the analysis. At that time, there were also few female motorcyclists. In 2010, the mobility observatory in Ilede- France estimated a 13% share of women among motorcyclists. In 2020, this figure is even lower, the share of women has fallen to 10%. Be careful because as many customer segments continue to be restricted, it continues to be difficult to make a living from it.” The majority of uniform shops open in Bordeaux or Marseille for example run aground,” the entrepreneur added. “Creators are always optimistic, that is their nature, but sometimes you have to accept the reality of numbers the numbers," he advises, recommending doing some market research before starting a niche.

Segmentation has also proven to be a clever way to attract highly demanding clients who are looking for a personalized approach. Yvan Bosser, founder of Comptasanté, knows something about it. Its chartered accounting industry specializes in supporting freelance healthcare professionals: nurses, speech therapists, osteopaths, etc. In the hypergrowth phase, the industry is recruiting 15 people by 2021. “Each client has a special chartered accountant who understands the vocabulary of health professionals: that's reassuring”, he explains. Entrepreneurs recommend betting on quality.” When you are in a niche market, there is a lot of word of mouth.”

This good segmentation strategy has other advantages. He avoids drawing the wrath of the big players. “Hyperspecialization protects us,” agreed Yvan Bosser. “We don't accept other people's clients: most didn't have chartered accountants before choosing us,” he complied. This is confirmed by strategy professor Philippe Silberzahn, taking the example of Airbnb.” Initially, this American startup targeted customers who could not afford to go to the hotel. Airbnb is located in a small market and does not accept customers from Accor Hotels.»

The limitation of this strategy lies in the nature of the niche itself. When it is safe, it will be difficult to get out of it. To improve, there are 2 solutions offered to entrepreneurs: expanding their clientele, as Airbnb tries by offering accessory travel activities, or expanding a wider geographic area, such as Heetch in French speaking countries: Belgium, Algeria, Ivory Coast… The following procedure is a concentric roundabout, as Bruno Raillard, co-founder of investment fund Frst concludes.” We recognize the type of early customer who is dissatisfied with what the market has to offer. After that, we developed a new product lineup to appeal to a wider audience.”

#2. Legal strategy: changing regulations

Betting on regulatory changes, or even legal evolution, can be a very profitable strategy in the long run. For strategy professor Philippe Silberzahn, “the law does not escape the notion of division. It is a permanent dialectic between historical actors, who protect their achievements, and new actors, who are fighting for the evolution of rights.” But this strategy requires tenacity and financial strength to run into any kind of conflict.

When Ornikar was launched in 2013, its co-founder Benjamin Gaignault bet on the rapid evolution of regulations relating to driving license messages. The reforms, the cost is thought to be very large, the circumstances of the investigation have become the theme of the presidential campaign for the past few months. The startup admitted today was a little naive and did not adequately estimate the anger of the driving school trade union that brought it to court for unfair competition. "I urge any entrepreneur who embarks on this strategy to know the law by heart and think fast about fundraising," added the president. ornikar.

The start-up quickly secured one million euros in funding and a 500,000 euro loan from Bpifrance. “This money allowed us to stay for 2 years and work with lobbyists”. This legal battle also publicized its goals especially in a New York Times column on August 23, 2014. In August 2015, the law for equal economic development, activity and opportunity, known as Macron's law, recognized equal treatment between driving schools. as well as free applications. But that doesn't quell all the demands. In 2019, the industry is still tasked with creating false advertising. That appeal was rejected in October 2019. Ornikar is currently claiming 1.5 million students for online coding courses in France and Spain. 100 million euro fundraiser in April 2021.

When an investor decides to bet very early on in a start-up that practices this type of legal strategy, he is betting on the future. “It is a combination of trust, risk, and opportunity,” analyzes Bruno Raillard, whose investment fund has chosen to support search engines. legitimate Doctrine. The startup that was created in 2016 raised 10 million euros in 2018, then it was already in a good mood. Lawsuits for theft of evidence have been hanging around the industry, as a post on Les Echos at the time showed. By opening up simplified access to legal issues, legaltech has also positioned itself directly against traditional law publishers. The latter is a trade for "unfair competition" and "parasitism".

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The limits of legal strategy are due to the financial solidity of the start-up, its capacity to experience significant legal fees and to trigger a lobbying campaign to intensify, or even bring about, the desired regulatory changes. "Media coverage is a lever for development", also underlined Karim Messeghem, professor of entrepreneurship and strategy at the University of Montpellier. "The aim of this campaign is to seek social acceptance," he said, taking the example of the CBD market, whose derivatives were recently legalized. The example of Kanavape, co-founded by Sébastien Béguerie and Antonin Cohen-Adad, is symbolic. In 2017, the two businessmen were sentenced to eighteen and fifteen months in suspended prison and a fine of 10,000 euros. The industry did not survive despite the acquittal pronounced in November 2021 by the Aix-en-Provence Court of Appeals.

#3. Innovation strategy: forcing technological breakthroughs

When a market is double locked, sometimes it takes innovation to disrupt it." An outsider makes a different rule: he can question market beliefs and suggest alternatives", judge Philippe Silberzahn. The essence of innovation is being at the forefront, estimating the reality of the future, while creating the demand for it today. This, for example, was Toyota's initial hybrid determination, launched in 1997, when no one in the auto industry had yet questioned the notion of thermal vehicles.

This avant-garde body shape is claimed by many technology start-ups. Devialet, created in 2007 in Paris primarily by Quentin Sannié, is a great example. Start-ups innovate in audio systems with unique algorithms to deliver a high-end sound experience. Rather, the brand will design and market the speakers, as well as a prestigious image. In the near 10 years, Devialet has established itself as a global reference. In 2020, its turnover exceeds 100 million euros. French innovation moreover comes out of the strict framework of the speaker. It currently appears on Chinese tv, German cars and French and English internet boxes.

Innovation is also at the core of Toopi Organics' business. The goal of this startup, which was created in 2019 and raised 1 million euros, is to make traditional fertilizers obsolete thanks to organic fertilizers sourced from human urine. Its innovative product facilitates the absorption of phosphorus that is naturally present in the soil by plants. Cheap, locally sourced raw materials, partnered with collective premises, within a 100 kilometer radius of any of the industrial processing centers.

Although sold for 10 times less than chemical fertilizers, these biological fertilizers have to create a place – they must receive a sales permit within a few months. Early on, the fertilizer market was structured by major global players. After that, it was difficult to convince farmers to change their habits.

The increase in fertilizer prices in recent months and fears of shortages have, however, restored natural alternatives such as natural fertilizers. "Our customers have an economic interest in getting out of chemical inputs and favoring better models", explains Michaël Roes, founder of Toopi. For price comparisons, we must increase the reduction in water bills. This start-up displays its ambition: to market 200 million liters of fertilizer within 5 years. He hopes to break even this year. And in 2024, Toopi will collect urine from residents and Olympic athletes in Paris.

Another advantage of innovation is industrial as well as intellectual property. But in this area and to avoid very fast copying, you need to know how to protect your findings to maintain your edge. If possible, the best solution is to obtain one or more patents. Devialet, for example, has filed more than a hundred patents to protect the technology embedded in loudspeakers. On the other hand, for Topi Organics, the industrial process is also patented. The start-up has taken steps to extend the validity of its patents in each country where it intends to deploy, such as the United States, Argentina or China.

The limits of innovation strategy can be summed up in one word: tempo! Research and development takes time, and therefore money to finance it." Which is hard to convince potential investors, because you can't say everything," says Léa Pons, development manager at France Active, a funding network for startups. Therefore, he recommended that fundraising innovators sign a confidentiality clause.

In conclusion, the success of a technological innovation also depends on the level of adoption by customers. Sometimes it takes time to evangelize the market, and it continues to take a long time as innovation imposes new standards. Beyond "early adopters", it is necessary to convince a larger customer base. What the American theorist, marketing specialist, Geoffrey Moore describes in the popular novel "Crossing the Chasm." A perfect illustration of this is the bitter fiasco of the popular Google Glass, which emerged in 2011, at a time when the idea of ​​augmented reality was unknown to the general public.

#4. Comparison strategy: bet on the singularity

The last strategy we suggest you explore has to do with brand positioning. “When the iPhone hit the market in 2007, cell phones had been around for 20 years,” recalls Philippe Silberzahn. Apple is taking a different view of its competitors and leaving the technological innovation race for another type of innovation: design and user experience.

A differentiation strategy consists of modifying some elements of a product or service. The best example we can cite is what made the Louboutin house popular. The pump's signature red sole is a recognizable feature and is now recognized as part of the brand. In a highly competitive market, Louboutin has improved its touch without modifying the product.

The new use or return of fashion is a way to suggest alternatives to existing offerings." Some industries are betting on the current underlying trend to return to familiarity", explains Karim Messeghem. "Other modes of consumption are emerging, driven by the rise of the circular economy and ecology".

When Céline Augusto launched Love&Green in 2011 with her husband, she decided to go against the flow of the toddler diaper market, which is dominated by P&G and its Pampers brand." We then made a bet to deconstruct the product, showing consumers that diapers are not just about usability and fear of leakage, but we also have to pay attention to the composition," explained the entrepreneur.

Love&Green sterilizes the growing ecological disposable diaper market. The first 2 years were hard. Big distribution was more than reluctant." At first, it was difficult to convince big brands because there were still universal doubts about ecology. "With sheer force, this small brand has made a name for itself. recalls Céline Augusto. Ties are only normalized by the presence of another ecological competitor. "If you want to go head to head with the big players, plan a big legal budget and pick a very solid attorney who has an offensive culture," advises co-founder Love&Green. Claim the brand today

The limitation of a differentiation strategy is to lock yourself in one's singularity, and not pay close attention to customers and prospects. Louboutin is currently rejecting its popular red sole in models other than pumps and moreover has produced a line for men. Likewise, Love&Green has expanded its brand to other hygiene products for toddlers, but also for mothers and all women.

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