EP 252: What Are Barriers To Entry?
In today’s marketing fundamentals episode, we’re talking about an important economic concept: barriers to entry. These are factors that make it more difficult for a newcomer to enter a market. Barriers to entry protect existing businesses from competition and tend to allow monopolistic pricing. Let’s dive in and discuss why you need to create barriers to entry in your online business.
What You'll Learn in Today's Episode
- Where barriers to entry are high, you tend to have higher prices and profits
- Where barriers to entry are low, you have to bring prices down because of competition
- Regulatory and professional requirements are examples of barriers to entry
- High start-up costs in a market create a barrier to entry
- Switching costs are another type of barrier to entry (e.g., banking)
- Technology requirements can create also a barrier to entry
- In the online space, there aren’t many barriers to entry — this means it’s easier for you to get started but it’s also easy for your competitors
- One way switching costs show up in the online marketing space is technology
- You need to create barriers to entry in your business to help you protect it
- One way to do this is customer loyalty
- Another way is via technology (for example, I created legal agreement generators, which creates a type of barrier to entry for potential competitors)
- Another example of a barrier to entry is creating a repository of assets that would make it difficult for anyone to catch up with you (for example, I created my FREE training program BADA$$ Online Marketing University)