Amid Talk of the End of the Startup Boom, Here’s What an IPB University Consumer Behavior Expert Has to Say
Discussions about the end of the startup boom are trending online. Responding to this phenomenon, IPB University consumer behavior expert Prof Ujang Sumarwan said that startups will essentially continue to have opportunities for growth, as long as they can meet consumer needs and adapt to changes in consumer behavior.
From the entrepreneurs’ perspective, interest in founding startups is not expected to wane. According to him, startups continue to offer opportunities for those who want the freedom to express their ideas without being tied down as employees at large corporations. “That’s why there will always be people joining startups,” he said.
However, from a business standpoint, the survival of existing startups heavily depends on their ability to compete in the market. “Those who succeed are those who can offer products or services that have never been provided by other people or companies,” said Prof Ujang.
He believes the narrative of “the end of the startup era” is not without reason. Competition in this industry is intensifying, and a number of startups that were once successful are now faltering because they have failed to adapt to dynamic changes in consumer behavior.
Differentiation Is Key
According to Prof Ujang, consumers’ basic needs essentially remain the same. However, consumers now have an ever-increasing number of product and service options. Therefore, startups must be able to offer differentiation so that their products have a compelling reason to be chosen.
Without a clear point of differentiation, consumers tend to revert to tried-and-true products. “When a startup’s product doesn’t offer features that differ from older products, consumers will choose the older product that already provides a guarantee,” he said.
The Pitfalls of Discount and “Burn Money” Strategies
One reason for the decline of many startups, according to Prof Ujang, stems from a strategy that relies on discounts. Consumers with low purchasing power are indeed price-sensitive and easily drawn to promotions.
However, in the long run, these incentives lose their appeal if the product fails to solve consumers’ problems. “Don’t always rely on discounts, because discounts and promotions are short-term solutions,” he said.
He highlighted the “money burning” strategy that startups used to commonly employ to attract users. The problem is, this strategy creates consumers who are accustomed to low prices. “When consumers see a product that used to offer discounts but no longer does especially if the product appears no different from others they’ll switch to another company or product that offers discounts,” he explained, a risk that, according to Prof Ujang, has now been widely proven.
From User Numbers to Profit
The shift in strategy from chasing user numbers toward profitability also affects consumer loyalty. “Having a large number of users without generating profit is pointless, because it won’t lead to sustainability. What’s most important is making a profit, even with a small number of users,” he said.
The Role of Government Policy
Beyond a company’s internal strategies, Prof Ujang believes that policy support also determines the future of startups. “The government must streamline all regulations that weaken or hinder startup growth,” he said.
With a supportive ecosystem and the right strategies, he believes the notion that “the startup era is over” can be refuted—startups still have room to grow and compete. (dh) (IAAS/LAN)
