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Aug 19th, 2021 Share: Share on Twitter Share on Facebook Share on LinkedIn

Smaller And Smaller

During my most recent Disrupt Disruption podcast with Dave Goldblatt, where talked about the disruptive potential of all things crypto (the podcast episode will drop in about two weeks), he recited the Prego story: Prego is a rather large maker of pasta sauce. In the 1980s Prego tasked a famous market researcher Howard Moscowitz with finding the perfect pasta sauce for the American market. Moscowitz created 45 varieties of pasta sauce — ranging from chunky to smooth, sweet to spicy, and anything in-between and took them to households across the country. All with an aim to find the single best flavor for the market. To his surprise, Moscowitz couldn’t find a single winner — consumers rather clustered around three varieties, one of which was entirely new to the market (pasta sauce with large chunks of vegetables). Prego followed his advice, launched three distinct pasta sauces and became the number one selling pasta sauce in the US market (across their varieties).

We are moving into a world which looks more and more like an hourglass: A few companies become very, very big and capture large chunks of the market (think Amazon, Facebook, Walmart), and a whole bunch of companies will operate in smaller and smaller (but often very lucrative) niches. We will have Prego selling its three pasta sauces to the American consumer and a ton of specialty pasta sauce manufacturers serving very specific needs (or in the case of pasta sauce: tastes). Those market niches will get more specialized and thus smaller all the time. Luckily it also becomes easier and easier to find and serve those customers.

Face it: Most of us won’t build the next Amazon. So, we better get really good at identifying our niche, targeting it with a laser-focus, operate highly efficiently and serve our 1,000 true fans.

P.S. In case you want to learn more about the Prego story, Malcolm Gladwell did a TED Talk about it.

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