In most third-world countries, a customer can walk down any large street in any town and find dozens of small businesses that look exactly the same and offer the exact same products. The copycat businesses usually start emerging when one person has a new idea (e.g., selling fruit, sewing rags into skirts, repairing bicycles) and starts a business based on that idea. Pretty soon, others see the business and decide to duplicate it. And before long, all of the neighbors are selling the exact same thing in the exact same way. This phenomenon is especially true with simple businesses that are easy to understand and duplicate, and it often leads to price wars, in which businesses compete for customers based solely on who can offer the lowest price. When these price wars happen, the supply of a product quickly becomes larger than the customers’ total demand for the product, and all of the businesses end up doing poorly or losing money as a result.

In order to prevent price wars and attract customers away from other businesses, you must be able to offer something unique to customers—something that differentiates your business or products from the other businesses and products in the area. You can differentiate your products in a variety of ways. A few of them (illustrated with the example of a fruit stand) are listed below.

• Differentiate based on location. Moving your fruit stand even just a block away from the other fruit-selling businesses might put your business in a new business district that doesn’t yet have any fruit sellers. When moving a business to differentiate it from the competition, look for a location that is more easily accessible than your competitors’ locations. Perhaps find a site that is closer to a parking area or bike path, so customers can see and access the fruit stand more conveniently.

• Differentiate based on products. Carrying a wide variety of fruits, innovating with new products (e.g., fruit salads), selling complements, or packaging products in unique ways might entice customers to visit your fruit stand or to buy more from your store than they might usually do.

• Differentiate based on business services. Offering lines of credit to big-spending customers might keep them coming back to your business.

• Differentiate based on customer service. Doing small things like delivering fruit to customers’ homes, offering services with products, or developing a reputation for delivering on time can help boost sales tremendously.