“Yes, we have a couple of competitors, big competitors, but they pretty much leave us alone. We’re much too small in the market to be more than a thorn in their side,” Gene explained.
“So, as the overall market contracts and the Top Competitors‘ revenues get pinched, where do you think they will go, to hold on to market share,” I asked.
“Well, we always hope they will fight with each other,” Gene continued.
“Why would the Top Competitor in the market fight with Number Two when they can just come in and take out Number Four or Number Five?”
Gene sat up in his chair, suddenly uncomfortable. “Well, Number Four would be us. And they have always left us alone. After all, we just pick up the crumbs that fall off of their cake. Why would the Top Dog want to come after us?”
“Why would the Top Competitor want to spend a lot of money, energy and resources fighting with Number Two, when they can take your customers without a whimper?” I asked again.
I could see Gene’s eyes tracing this chess game in his mind. “Look, Gene,” I continued. “In any market, when times are good, it’s easy to be Number Four, living off the crumbs. But, when the market gets tight, the only place to be is Number One or Number Two. Number Three and Number Four will have their heads handed to them.”