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Supply and Demand

Fastlane Liam

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How do you find Low or Poor supply and High Demand?
 

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Kak

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Market equilibriums are the entire basis of self regulating, free Enterprise, capitalism. The condition in the market you want to find does not exist naturally. Something creates it and it's temporary.

One way to do it is to create new demand and serve it. For example... iPhone and GoPro. Or serve a newer, immature market that someone else created. For example Tesla.

The only other way this occurs is during a shortage. If you can get product when your competition can't, that is a good thing. Or a new alternative to the product experiencing a shortage.
 

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In mature industries it is hard to find that.

That is why some books keep pointing out the concepts of the adjacent possible ("Where Good Ideas Come From", "So Good They Can't Ignore You").

In mature industries that usually means that the Commandment of Entry is satisfied so well that you yourself hardly have an opportunity to enter.

My way of looking at it is that currently there are certain areas where innovation happens so fast, that it is almost impossible to tame the technology (there are books that outline how disruptive technologies did not improve productivity right away. Instead, processes and products needed to be invented around the technology).
In those areas it is possible to get to the adjacent possible even as a mere mortal.
For that reason I think technology / software is where almost all the golden opportunities lie. If you find other industries that are currently affected by a disruptive technology, you can probably find opportunities there as well.

The thing is, demand has usually to do with "Managerial Leverage" (getting more done with less input) and only indirectly the features of a product. If you see demand for something but you can think of a way to gain more Managerial Leverage with another solution, then you can change the supply / demand situation quickly without issues.
 

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In some cases there are "under-served markets." It's not necessarily that there is no supply anywhere, but there may be no "path" to the supply. In my experience these appear when:
  1. People need something that they do not know they need, so you can inform them of their need.
  2. People need something, but there is a barrier to entry for providers of that thing.
The latter is one of my favorite occurrences. Yes, the "barrier" makes it difficult to meet the need, but when you do, you can often avoid excessive competition. Meanwhile, people who are looking for "low lying fruit" are shoulder to shoulder licking at where the low lying fruit is supposed to be.

Example: I built a niche selling to dermatologists, tattoo-removal businesses, and medi-spas. The product existed, and at least some of the businesses knew they needed it. After I sent a few letters and exchanged some calls, they all knew how much they needed it.

But it was harder to understand and explain than a lot of similar products. It was technical. You had to know something (not that anyone couldn't learn it). And you had to find the somewhat obscure suppliers. And you had to translate the terrible industry jargon into problems and solutions and scenarios that humans can understand. So I did all that, and it was great. I didn't have to "sell" at all... the clients needed my attention.

I think I stumbled on that niche by looking at the terrible flyers made by the suppliers. Most people selling the products I sold at the time would not make the effort to understand them. They were terrible. So terrible marketing on the part of a supplier of a useful product could be one way to find what you're looking for, I think.
 

Walter Hay

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In some cases there are "under-served markets." It's not necessarily that there is no supply anywhere, but there may be no "path" to the supply. In my experience these appear when:
  1. People need something that they do not know they need, so you can inform them of their need.
  2. People need something, but there is a barrier to entry for providers of that thing.
The latter is one of my favorite occurrences. Yes, the "barrier" makes it difficult to meet the need, but when you do, you can often avoid excessive competition. Meanwhile, people who are looking for "low lying fruit" are shoulder to shoulder licking at where the low lying fruit is supposed to be.

Example: I built a niche selling to dermatologists, tattoo-removal businesses, and medi-spas. The product existed, and at least some of the businesses knew they needed it. After I sent a few letters and exchanged some calls, they all knew how much they needed it.

But it was harder to understand and explain than a lot of similar products. It was technical. You had to know something (not that anyone couldn't learn it). And you had to find the somewhat obscure suppliers. And you had to translate the terrible industry jargon into problems and solutions and scenarios that humans can understand. So I did all that, and it was great. I didn't have to "sell" at all... the clients needed my attention.

I think I stumbled on that niche by looking at the terrible flyers made by the suppliers. Most people selling the products I sold at the time would not make the effort to understand them. They were terrible. So terrible marketing on the part of a supplier of a useful product could be one way to find what you're looking for, I think.
I believe that there definitely is a third case where under-served markets exist. I am referring to complacent suppliers. You suggested it when referring to "terrible marketing."

One of the reasons I chose the product category for my importing business was that I had heard quite a few reports about poor service in that industry.

I quickly saw evidence for myself when searching for the suppliers in that industry. In those days printed advertising was king. Their advertising was pathetic! In every case their advertisements were very much like reproductions of a business card.

They all went along these lines:

Wonderful Zenith Company

We are established suppliers of
Product A
Product B
Product C
Product D
Call us on 313 5555555

Their call to action was an oversize print of their phone number. Their advertising not only showed complacency it also showed a total lack of understanding of customers.

So I agree. Look for poor marketing and you could find a winner product.

Walter


 

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I believe that there definitely is a third case where under-served markets exist. I am referring to complacent suppliers. You suggested it when referring to "terrible marketing."
This is so true!

Wonderful Zenith Company

We are established suppliers of
Product A
Product B
Product C
Product D
Call us on 313 5555555
Ahahahahaaaa! This makes me laugh because I have seen so many of these same flyers. Why do they even call it marketing? People who do this are just increasing demand for the trash collection industry.
 

Kak

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I believe that there definitely is a third case where under-served markets exist. I am referring to complacent suppliers. You suggested it when referring to "terrible marketing."
Complacent suppliers have nothing to do with market dynamics. Is it a determining factor in entering the market? Of course, but it doesn't hold water for long.

Does macro level complacency decrease supply or increase demand relative to a market equilibrium? No. It's just part of the equilibrium.

Now if it was an isolated incident of complacency. That can create a shortage which is one of the instances I listed.
 
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Will-v-the-World

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Market equilibriums are the entire basis of self regulating, free Enterprise, capitalism. The condition in the market you want to find does not exist naturally. Something creates it and it's temporary.

One way to do it is to create new demand and serve it. For example... iPhone and GoPro. Or serve a newer, immature market that someone else created. For example Tesla.

The only other way this occurs is during a shortage. If you can get product when your competition can't, that is a good thing. Or a new alternative to the product experiencing a shortage.
How did the iPhone create its own demand?

Isn't it that there was an unsaid demand for a device with the functions of an iPhone (many capabilities, a camera, simplicity, etc.), which was filled by Apple?

If I created a portal, I would be supplying the demand for faster travel. I wouldn't be creating a demand for faster travel, it was already there.
 

Kak

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How did the iPhone create its own demand?

Isn't it that there was an unsaid demand for a device with the functions of an iPhone (many capabilities, a camera, simplicity, etc.), which was filled by Apple?

If I created a portal, I would be supplying the demand for faster travel. I wouldn't be creating a demand for faster travel, it was already there.
Apple created the market for touchscreen smartphones. Demand for an esoteric smartphone with similar capabilities may have existed prior to Apple creating the iPhone, but it was undefined, abstract and unmeasurable. Much like a flying car now.

I'm talking in economic terms. For all intents and purposes, Apple created the demand.
 

Will-v-the-World

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Apple created the market for touchscreen smartphones. Demand for an esoteric smartphone with similar capabilities may have existed prior to Apple creating the iPhone, but it was undefined, abstract and unmeasurable. Much like a flying car now.

I'm talking in economic terms. For all intents and purposes, Apple created the demand.
But you say that a low supply with a high demand only occurs unnaturally.

There is a high demand for a fully functional $10 4k TV, but there is a very low supply. What is unnatural about this?
 

Kak

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But you say that a low supply with a high demand only occurs unnaturally.

There is a high demand for a fully functional $10 4k TV, but there is a very low supply. What is unnatural about this?
I didn't say that actually. I said it's not a condition that occurs naturally, something created it and it's temporary. Is a $10 4k TV currently a natural occurance in the marketplace?

Pricing has an equilibrium as well.
 

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Rabby

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There's even a demand for fully immersive 3d TV room. Stand in the middle of the football game and watch your favorite payer make the tackle! But maybe there's only one guy in Bulgaria who happens to make them, and the cameras for them, and so far he's a failure at communicating what he has, or teaching anyone else to make them (speaking hypothetically... don't actually go looking for him in Bulgaria).

Using a case like this to illustrate, you could say the condition is unnatural or "something created it" -- poor communication, language barrier, only one guy/company willing to do the work. But it's an imbalance. And while I admire many things about markets and place a lot of trust in them, they don't always pick up on every opportunity. I've seen very good products that missed the market because the communication of an offer was poorly executed. Worse, after that there may be capable innovators who assume that product failed because "the market didn't want it," rather than that the execution was bad. It can take a long time to see the same product again.

Temporary? Yes, everything is temporary.
 

rollerskates

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Look for poor marketing and you could find a winner product.
Exactly what I'm working on now. I found a niche of a niche and the sub niche has been done poorly, so I'm going to do it better.
 

Will-v-the-World

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There's even a demand for fully immersive 3d TV room. Stand in the middle of the football game and watch your favorite payer make the tackle! But maybe there's only one guy in Bulgaria who happens to make them, and the cameras for them, and so far he's a failure at communicating what he has, or teaching anyone else to make them (speaking hypothetically... don't actually go looking for him in Bulgaria).

Using a case like this to illustrate, you could say the condition is unnatural or "something created it" -- poor communication, language barrier, only one guy/company willing to do the work. But it's an imbalance. And while I admire many things about markets and place a lot of trust in them, they don't always pick up on every opportunity. I've seen very good products that missed the market because the communication of an offer was poorly executed. Worse, after that there may be capable innovators who assume that product failed because "the market didn't want it," rather than that the execution was bad. It can take a long time to see the same product again.

Temporary? Yes, everything is temporary.
So what created the high demand was the consumers' desire for a more immersive way to watch football, and the low supply of products to fill their desire was caused by something, x?

So what isn't natural about this imbalance?

Oh wait, so are imbalances themselves unnatural in capitalism? So is the term "natural" used to describe the state in which supply meets demand?
 

Kak

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So what created the high demand was the consumers' desire for a more immersive way to watch football, and the low supply of products to fill their desire was caused by something, x?

So what isn't natural about this imbalance?

Oh wait, so are imbalances themselves unnatural in capitalism? So is the term "natural" used to describe the state in which supply meets demand?
Yes, imbalances work out. It is far easier to see in a commodity market where if you sold something for 1% under market, it would sell immediately and 1% over it would almost never sell. EX: High oil prices will drive production which drives prices back down. It's a cause and effect relationship that balances the equation over time. The movements are the opportunity.

I'm speaking in a purely economic sense. The "demand," in the examples you have mentioned, requires an assumption of human behavior. It is perception. We are, most likely accurately, forecasting a demand. It is however, still conjecture whether that demand factually, with 100% accuracy, exists. Like the immersive experience, or the flying car, we "know," but we don't.

I have realized the direction of this thread isn't true supply and demand, the study of which usually involves an existing market. This is, even though it is a great guess, still speculative. This is honestly a "good ideas" thread where we are seeking something that might have good demand once provided.
 

Rabby

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This is honestly a "good ideas" thread where we are seeking something that might have good demand once provided
Right. I think this changes how you look at things, because the quickly self-balancing supply/demand nature of free markets applies well to things that are already commoditized. But for things that the market still sees as new or better than what they have, imbalances between supply and (hypothetical) demand can grow, and exist for a long time, and exist for various reasons, some of which are not simple production capacity or manufacture cost.
 

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