Warren Buffett once said, “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”
By Buffett’s reckoning, then, Marlin Steel had a terrible business 10 years ago.
In 2003, Marlin made $800,000 selling wire bagel baskets, and it was sinking fast because of newfound competition from Chinese factories, which were selling bagel baskets for $6–half of what Marlin’s baskets cost. “Marlin’s customers were switching to save $200 a store. And Marlin would never be able to match its Chinese competitors on price,” reports Charles Fishman in Fast Company.
This niche U.S. manufacturer fended off foreign competition by radically reshaping its pricing and customer base.
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