What as a business strategy, the strategy behind “dumping” is to __________?
As a business strategy, the strategy behind “dumping” is to _________ see how much your competitors are doing, and then do just enough to stay in the market. By staying in the market, you can create a customer base that will be loyal to you. But there is actually a strategy behind this. One company has been able to maintain their continual success by stepping back when they feel they should have made more progress than they have so far. When this happens, instead of feeling demoralized or angry because “we tried our best” or “we did everything we could”, they instead see it as an opportunity for them to continue with the process at a slower speed for given duration of time in order to catch up with their rivals and stay on top.
Some more facts:
The strategy behind “dumping” is not a strategy of quitting and giving up. It is more a strategy of “pulling back”. Once you are confident that you can win the market, the next step is to pull away from it. Or better than that, start to show some indifference towards it. By doing so, even though you’re still in the market and still doing your best, people will see you as a competitor that’s on someone else’s side for now but might be coming over to their side later. People will probably get used to the idea (or at least use this as an option), and eventually your competitors would make more progress than you have done so far.
The strategy behind “dumping” is not a strategy of selling below cost. If you do just enough to stay in the market, why would you bother selling it at a loss? You would only be making money by selling below the cost of production and overcharging customers, but you wouldn’t get any benefit from it. (That’s because in this strategy, your biggest goal is not increasing sales but to stay in the game.) You are not supposed to give up and stop competing. Rather, what you have to do is make as little progress on this particular market as possible and leave it for other competitors to pick up the pieces even though there is nothing stopping them from picking up the pieces themselves.
What are the features?
The feature of “dumping” is to make your competitors think that by pushing ahead too quickly, they will lose sales. When you see that they are pushing ahead too rapidly, you pull back. So what you do is create a situation where your competitors see that they are leaving money on the table by being too aggressive in growing their market share and, at the same time, make them think that if they keep the same pace, they’ll soon be left with nothing. It’s like if someone tries to cross a river with a full backpack filled with stones, but doesn’t know how to swim and gets washed away right after crossing it. The key to successful “dumping” is to create a scenario where your competitors would want to slow down and take the risks of being left with nothing by slowing down just enough for you to pass them.
What are the steps?
The steps of this strategy are: 1) dominate the market; 2) let your competitors catch up with you, but not too much; 3) when they catch up and start taking over, slow down your pace just enough for them to get ahead, but not so much that you’ll lose the market share. Very often, people have already been burned by this strategy. They’ve already seen people use it before. So they are more aware of it. They may actually see it coming, but are unaware of how to deal with it.
Is there an alternative?
The alternative for “dumping” is simply to say that you don’t see the point of staying in this market when what you have already achieved is good enough to maintain your leading position. You don’t need to run a risk or do something unnecessary in order to enjoy being on top. If people prefer someone else’s product, let them get it from someone else and leave your product for a new target market because you’re already on top.
What are the risks?
The biggest risk of “dumping” is that your competitors do not take the bait. They may not want to slow down and risk being left with nothing. Even though they could welcome your competitor’s entry into their market, they may also see it as an opportunity to just boost their own sales by staying aggressive in order to maintain or grow their market share. If that happens, then you are doing something for nothing and putting yourself in a risky situation where you’re left with no benefit. That’s because you’ve already done everything right but in the end all you have is a faster competitor that is selling more than you are and often at lower prices.
What are the benefits?
The benefits of this strategy are that it makes you look as if you’re doing everything right. When you do just enough to stay in the market, people will see that it’s not that your business is awful but because when your competitors are doing well and being aggressive, they aren’t really competing with you at all. If this looks like a situation where your competitors are holding back, people will see them as someone who’s still strong and doing their best.
