Currently, when large enterprises from abroad appear more and more, small and medium enterprises must urgently find their own highlights in order to survive and compete with the big guys. However, this is not an easy task. In the mass market, the competition is getting too fierce and the products are gradually becoming mass, there is no difference. Not all of companies aim at competing each other to gain the highest total market share. There are companies looking for the sweet spot to carve out a niche. Therefore, many companies have chosen to start their business in the Market niche (roughly translated as Niche Market) - where they have the ability to lead and avoid too much competition. So what is the market niche? What are the pros and cons of being a market nicher? And which marketing direction is useful for the company that wants to pursue this market? Let's find out with hocmarketing.org through the following article!
What is a market niche?
Market niche is a subset of customers who have specific needs which are not being satisfied but other companies are already providing the same products or services. Focusing on market niches allows companies to serve best those who need them most, as these customers are less price sensitive as well as require more customized products and services. Furthermore, many new companies find it easier to enter the market niches than fight with big brands over the majority of market share.
What is a market nicher?
Market nicher (Niche marketer) is a company that focuses on the narrow niche in the market. A differentiating factor that allows companies to compete with big brands who are already well established. Market nichers focus on specific groups of customers, buying motives and competitors for their products or services.
Examples of successful market nichers
Niche market operators will often determine if the customer's needs and wants have been addressed by another company, then proceed to provide and develop products/services that meet those needs. separate from the customer. There have been many successful businesses in identifying specific business niches and strategies for this market. Such as:
1. Red Bull
Red Bull is a prime example of a market nicher who is loyal to his niche and successfully becomes a “big player” in that market. Factors that make Red Bull successful include:
- Clever opportunism: In the past, while energy drinks were very popular in Southeast Asia, they were quite rare in the West. So, when Dietrich Mateschitz came to work in Bangkok (Thailand) and knew about this concentration-boosting drink, he decided to choose the energy drink niche to develop in Europe. Red Bull energy drink was officially launched in 1987.
- Loyalty to the niche: While other beverage companies have expanded their products to filtered water, mineral water or even food to increase sales and cover other markets, Red Bull remains loyal to the market. into its niche market. Although the company still launches different flavors, all are energy drinks, not other drinks such as tea, juice, ...
- The correct name: "energy drink". Although at the time, drinks with caffeine and sugar were known as soft drinks or sodas, the name "energy drink" best represented the effects of the product and was the newest name.
Brand image associated with inspirational stories: It can be seen that Red Bull has sponsored events: the record-breaking Orbit jump, the Formula One car race not to sell products but to connect brands. with images of human strength, discovery and conquest. Thanks to these inspirational real-life stories and images, Red Bull attracts even more loyal customers.
2. Lefty's chain of stores in the United States
Left-handed people make up only 10% of the world's population. Therefore, when researching and developing products, manufacturers often ignore the differences of this group of people. However, if you look at the world wide (with a total population of more than 7.7 billion people), there are more than 770 million customers being forgotten. It's an unfortunate loss for the suppliers.
Seeing the "loopholes" of most manufacturers, Lefty's has launched a store selling items for left-handed people. Here, left-handed customers can find a full range of daily necessities, school supplies to souvenirs designed specifically for them. Without choosing this customer group, Lefty's will have to compete very fiercely with many other stores and supplies suppliers. It is even difficult for Lefty's to survive in such a large market.
While Honda, Yamaha, Suzuki ... promote the production of many types of vehicles to serve different customers in the large market, Harley-Davidson chooses for itself the large, masculine motorcycle market. . Harley-Davidson's goal is not to make the world's best bike, but to produce the most epic.
Therefore, Harley-Davidson invests in the production of vehicles with:
- Big looks and roaring engines. Accessories such as boots and leather jackets are also included.
- Sporty, strong style exclusively for customers who love breakthroughs, are passionate about freedom, have a bare and masculine nature.
In addition, to understand customer needs and psychology, both employees and leaders of the company also participate in Harley-Davidson driver clubs to maintain close relationships and improve products products more suitable for customers.
Unlike other watch brands, Rolex chose for itself a very rich niche and turned that market into its own “universe”. The market that Rolex targets is the elite with some characteristics that are willing to pay huge amounts of money for unique, strange, quality products/services and love the scarcity. Therefore, Rolex has made its own distinction by:
- Applying science - advanced technology to the watch manufacturing process
- Use an in-house gold foundry exclusively for Rolex
- All details on the watch are manufactured using precious materials, the watch case is made of special steel.
In addition, the marketing art of Rolex also contributes to increasing the brand's appeal to the elite. The watch company plans to control the distribution of products to authorized retailers to create a brand image of luxury, scarce and sought-after watches. The dominance of authorized retail partners creates a desire to own in customers even causing used watches to cost more than the one sold in the store.
Another example can be seen is Razer - a gaming gear manufacturer. It creates gaming peripherals with higher quality and more functions than the majority of its competitors. Razer tries to satisfy the customers who are looking for the superior qualities in their gaming gears instead of competing with big brands such as Dell, HP, Asus, Acer...
Market nichers have to be good at differentiating themselves from the main competitors by knowing their customers inside out . They should be able to clearly identify what exactly customers need and provide them with the solutions.
Advantages of market nichers
If businesses choose a niche market with a small and specific customer file, they will definitely have great advantages in their hands such as:
- Easy to reach customers right from the launch stage.
- Less pressure to compete with competitors.
- Customers have quite specific and clear needs, so businesses can easily exploit them to provide the most effective products/services for them.
- Can achieve higher net profit per product than mass market.
Disadvantages of market nichers
However, market nichers still face some of the following risks and disadvantages:
- Large enterprises can choose niche markets to increase brand coverage. From there, small businesses will have difficulty in doing business.
- The size of a niche that is too small will not be enough to sustain the company.
Niche markets lack stability because customers are easily influenced by trends.
Steps to identify a market niche
To identify the right niche and come up with the best idea to exploit the market, you need to do the following 4 steps:
1. Identify the strengths of the business
Start looking at your strengths and what you can offer to the market by answering questions like:
- What specific problem does your product/service solve?
- What problem can you solve better than your competition?
- Where is your product/service particularly outstanding?
- What are you knowledgeable about?
- What kind of customers do you want to serve?
2. Research your opponent
At this step, you should do thorough research on your competitors. Analyze whether there are competitors in your chosen field. If so, what have they been doing, have they solved the customer's problem thoroughly? Also, find out if there is any need or opportunity missed by competitors?
3. Get to know customers
The way to determine the direction of product/service development and inspire campaigns is to carefully research the target audience. Find out what they really want and need. Once you understand your customers, you can confidently provide them with the best products/services and convey the most memorable brand messages and images.
In addition, understanding customers also helps you keep abreast of the market you pursue and discover how to create a highlight for your brand.
4. Choose a niche, test and adjust your strategy
To get the most out of your niche and what you own, there needs to be a testing phase. You must test-test to see if your initial business idea is delivering the desired results and continue to tweak it accordingly. Whether you're pioneering a niche or solving a small customer problem, testing and tuning is essential. Maybe when testing, the product / service has not attracted much attention, but with just a few simple adjustments, the impact on the psychology and desires of customers can also help you successfully conquer the niche.
Note, this checking and adjustment also needs to be done iteratively to accommodate customer changes.
Competitive marketing strategies for a market nicher
There are companies that can reach mass markets and make big profits, while some other companies find it more effective to target a small group of customers who require customized products and services. Market nichers select the most attractive market segments and then narrow down their focus to capture profitable niche market.
The smaller the niche is, the easier for new companies to enter market. To take an advantage from being a new and small company, marketing strategies should focus on:
1. Developing unique products to stand out in the market.
This is the fastest way to attract customers because you are the pioneer in the niche and also the only, best choice for customers. First, find out which problems customers care most about and which are not solved by competitors. This helps you identify product development ideas and create outstanding benefits that competitors products do not have.
Next, focus on what your customers value to make sure every campaign and plan you put in place is relevant to what your customers care about, because your ultimate goal is still creating a product. products for niche markets.
It can be said that the strategy of creating and developing products just for the niche is a way to prove your business is better than the competition. Because, your product brings a specific benefit, meeting a need that no other product can do for a long time. This makes your business stand out from the rest.
2. Provide premium service that accompanies the product
This is an effective way to increase product value in the eyes of customers. When you provide additional services to customers, you are creating conditions to satisfy their smallest needs. So customers have more reasons to choose your product over other products. Whether it's delivery service, 24/7 advice or warranty,... you are working to help them shop more conveniently and with peace of mind. Just as customers perceive an extra benefit they can get from you, the more likely they are to be willing to spend money on your product.
3. Using alternative distribution channels for reaching niche customers
Distribution channel is also an important factor in the journey to bring products to customers. If a product is created for a niche but customers cannot reach it, it will be a waste. Therefore, depending on the size of the business and the characteristics of the niche, businesses need to choose an appropriate distribution channel.
The construction of a distribution channel must ensure that it is appropriate to the financial capacity of the business and easily accessible to customers. In addition, characteristics such as location, density, and shopping behavior of customers also greatly influence the building of distribution channels.
4. Build and develop target customer community
To get the most out of your niche, you need to keep up to date with changes in consumer psychology and behavior. At the same time, connecting with customers to support and maintain their loyalty is essential. Therefore, to choose the right platform for your customer community and how to expand your reach, you should learn about a few of the following criteria:
- Size of customer audience
- How customers like to interact
- The purpose for which you create the community
- Actions to take to connect customers
- Business budget
Example: A company that manufactures motorsports can reach its target customers through a community of motorsport enthusiasts. This is where you can listen to interesting stories about their experiences to capture the most accurate psychology, or you can interact directly with customers to understand their concerns and desires. them for the product... Thereby, you save a considerable amount of time spent in the customer research process.
Market nicher is a company that focuses on the narrow niche in the market. The main competitive advantage of the market nichers is paying attention to specific groups of customers. As a result, they can offer unique products or services with high prices. In addition, being a new and small company gives possible advantages when implementing marketing strategies, such as using alternative distribution channels or prices skimming strategy. Finally, in order to stay competitive constantly, market nichers need to develop new opportunities constantly in the niche market.