Freakonomics and Your Business Model

Freakonomics and Your Business Model

The other day I saw Steven Levitt, the author of the best-selling book Freakonomics speak at DePauw University.  Aside from the fascinating stories, one thing struck me: How does a University of Chicago Economics professor end up studying Chicago drug rings and Sumo wrestlers.  More interestingly, how does he get famous for it and end up with two best-selling books?

On the drive home, it hit me: Oh, it’s Business Model Tactic #69- Exploding the Bell Curve.  Every business has a place on the product bell-curve that is “explosion-worthy.”

The trick is where to we enter the bell-curve and what types of product or services can successfully explode up the curve.  Products like Starbucks Coffee, Soft Scrub, and Batter Blaster have used this tactic to create large profitable markets.

shifting the bellcurve business model

Small to medium-sized businesses should NOT attack the fat part of the bell curve.  This portion of the market is the mature portion.  Since it is mature, the winners and losers have already been determined and the margins are usually shrinking. 

Instead, we attack at the edges of the bell curve.  These edges are the soft underbelly of the market.  Go for the positions not yet taken and much less competitive.  Because they are less competitive, they tend to yield higher margins.  If you can find a sellable product or service on the fringes of the bell curve, you have a winning business model.

An example of this is when Soft Scrub cleaner came on the market.  Comet, a powdered cleaner was the dominant brand in the fat part of the bell curve.  Soft Scrub attacked on the fringe of the curve.  Then, through good marketing and quality product, the curve shifted and soft cleaners became the dominant portion of the market (the fat part of the curve). 

This is how we should market.  Attack a small portion of the market that we can win and then work to gain additional market acceptance.

business model for Softscrub


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