Do You Know This Story?

An old man and a young boy are selling watermelons in a marketplace. The old man initially has 4 watermelons and sells them for 20 pb each. The young boy also has 4 watermelons; the price is 15 pb*. The young man quickly sells 3 of his watermelons and is left with only 1 watermelon.

The old man realizes that he cannot sell his watermelons and, thinking that the problem is the price, he lowers his price to 10 pb. Seeing this, the young seller buys all the watermelons from the old man. Thus, the young seller has a total of 5 watermelons.

Now the young man is the only person selling watermelons in the marketplace. He takes advantage of this opportunity and increases the price of watermelons to 25 pb.

*pb: the currency of that country

This story is a metaphor that helps us understand many basic principles in the world of marketing. In the rest of my blog post, I will analyze this story and discuss many important topics, from competitive strategies to supply-demand balance, from marketing psychology to strategic thinking. In each title, I will enrich my writing with concise words that will make it easier for you to understand the process while learning lessons about the business world.

Competition and Pricing Strategy

The old man makes a move by lowering his prices, failing to correctly analyze the reason why he cannot sell his products. However, this move creates an opportunity in favor of the young seller. This situation is a critical example in terms of understanding the concept of "price leadership" in the marketing world. Conducting competition solely on price does not pay off in the long run; on the contrary, it can create opportunities for competitors.

"Where there is competition, price is just a game tool."

Supply and Demand Balance

The young watermelon seller takes advantage of the old man's price reduction and buys all the watermelons, becoming the only person selling watermelons in the market. This is a classic strategy implemented to create a shortage and direct demand. Consumers tend to value a product that is scarce more.

Controlling supply is one of the most powerful weapons of marketing strategies. Reducing supply at the right time increases demand and therefore price.

"Scarcity always increases value."

Marketing Psychology

The young man who is the only person selling watermelons in the market increases his price because he knows that consumers have no other choice. This is known as the "Single Choice Effect" Consumers place a higher value on a product when there are no other alternatives.

Seeing Opportunities and Taking Risks

The young watermelon seller, noticing the old man's indecisiveness and panic, risks his capital and seizes the opportunity. This is a great example of the concepts of "opportunity cost" and risk management. Seizing opportunities in the business world also requires taking risks.

"Opportunities are always open to those who can see them."
Süreyya Ciliv

Strategic Thinking and Innovation

The young watermelon seller does not only benefit from the current situation, but also foresees how the market will shape in the future. This strategic thinking is one of the cornerstones of success in the business world.

"The secret to success is to see the future from today." 
Süreyya Ciliv

I think the following words from the book The Monk Who Sold His Ferrari, which I am currently reading, can be inspiring in understanding the subtext of our story.

"Those who truly win in life are not only those who see opportunities, but also those who act courageously to seize them. However, this courage is possible not only with financial risks, but also by revolutionizing the mindset."

I thought that this quote could guide us in understanding the difference between the old watermelon seller's behavior by lowering the price and the young seller's move to create strategic opportunities. The young seller invested not in watermelons, but in the dynamics in the market. Isn't the secret of success hidden here:

Going beyond financial concerns and taking action by seeing the big picture.

Note: I am quoting Sureyya Ciliv because he is a valuable figure to me, someone I try to get inspiration from.