As children, my friend Nancy and I would hold roller-skating shows in my basement. To bring in a crowd, we would buy up the penny candy at a local store and resell it during the show. Not wanting to be deprived of their Dots and Milk Duds, the local neighborhood kids became a loyal audience. Years later, I learned we had been “cornering the market.”
In the early 1970s, Robert Taylor owned a small soap company called Minnetonka. With experience in the soap and toiletry markets, he saw an opportunity to marry up two things already in existence: liquid soap and pump bottles. It wasn’t patentable, as the components already existed and liquid soap had already been patented. With a potentially great idea that he could not protect, Taylor worried that large soap manufacturers would copy him and use their size to dominate the market… so he got creative.
His competitors couldn’t launch liquid pump soap without key parts. With this in mind, Taylor bought up two-years supply of every pump available from existing manufacturers. He owned the market and Softsoap became the undisputed leader. In the mid 1980s, one of those big competitors, Colgate Palmolive, purchased Softsoap for $61 million dollars.
Taylor bet the farm on this idea, spending $12 million to purchase 100 million dispensers. It was a gutsy move considering this one buy was more than his annual revenue—but it worked.
With recent talk of “patent trolls” and predatory behavior among market leaders, it’s a wonder that entrepreneurs ever succeed. Remember: innovation can take many forms. Supply, combined with an idea and guts, can be a very effective marketing strategy.
For info on why NOT having capital for your business might be a good thing, read here. And for another soap-related success story, take a look at this social entrepreneur’s strategy.
Start a Biz Strategy: Corner the Market