Every industry is an amalgam of value chains, demographic, behavioural, and geographic segments of customers and suppliers.
Inevitably, some of these segments are more profitable than others for a range of reasons. Therefore it makes sense to understand where the profits in your target value chain are being made currently, and where those profits may move to in the future.
There are two challenges here, the harder is seeing the future, but the second, identifying where the profits are now, should be easier.
Apply the Pareto principal to all the segments in the whole value chain, and you will inevitably see that at each point, Pareto rules.
It therefore follows that your best strategy is to identify the areas where your value proposition can add value to the 20% that deliver 80% of the profit.
The king of this strategy is Apple, who control about 15% of the volume of mobile phones sold, but accrues 85% of the profit available in the market.
Who are the 5% of customers who truly value something only you can offer?
Find them and you will be swimming in the profit pool, with little opposition.
