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Wednesday
Sep262012

Know Your Market Niche

All great companies have products or services that dominate a particular market niche. Mediocre companies, represented by an overwhelming number of small and medium sized businesses, often fail to routinely and accurately assess the niche positioning of their products or services. This is a major reason why few organizations fall into the “great” category. Without precise niche positioning, a company or brand will continue to compete in the “also ran” category.  This is not an easy way to increase business or profits. 

What is a Niche?  It can be a recess in a wall: a cranny or hollow.  In nature, a niche is the function or position of an organism within a particular habitat.  Few large organisms of differing species occupy the same niche. An example of habitat is the human occupation of cities.  You will seldom see enormous animals roaming the streets of L.A.! Even in the country, when coyotes occasionally venture into a town, their activity will usually be under the cover of darkness___when humans have temporarily relinquished their niche. [i]

DETERMINE YOUR NICHE

The constant jockeying for a niche position in the fashion market is an example of how very subtle changes in style, features, price, and image are crafted for the purpose of upstaging competition or creating a new niche category.  While most business is not such an intensive kind of effort, constant evaluation of  how quality, service, price, distribution, and image compares with that of  your competition can refine your niche positioning. [ii]

General Electric Company, one of  the world’s most consistently high-performing companies, has a policy to only occupy the number one or two spot of each business in which they participate. Divisions with numbers below the top two spots are sold.  In marketing, if competitors occupy the same space, it is usually a very small area. One way this occurs is the sharing of a convenient location; another common niche differentiation appears through different features, or price variations.  While the low-cost provider usually wins in a commodity goods war, many barely survive. [iii]  Fashion is constantly changing the features, psychologically “positioning” its product offerings in a never- ending  “Survival Of The Fittest” game.

The marketing niche is really not too different from a niche within an ecosystem. A free market, as in nature, sees the drama of “Survival Of The Fittest” continually played out. Any business or product that can dominate a particular niche will thrive.  A marketing niche can be driven by location, convenience, price, or unique feature. Many times, the niche differentiation is actually customer perception.

YOU ARE AS THEY SEE YOU

One important component of niche development lies in the market’s “perception” of the product.  This is a component of image or brand. Product perception can be one of the most powerful elements of the differentiation process.  It can be more important than the product itself.

Cola is an example of a niche market controlled by customer perception.  When a market is very large, only a few players really dominate it___ and they have become household names.  These names are so well identified with cola that we rarely order a “cola," but use the brand name as the drink’s identity!  Every few years, a new cola tries to compete for this niche of the beverage market.  While a variety of generic cola brands exist, I cannot think of a specialty cola. [iv]  Many generic colas exist to round out the rest of the flavors offered, rarely selling well on their merit alone.

Coke made a potentially disastrous decision when it changed its classic taste to a sweeter one----more like Pepsi’s.  They were responding to extensive research that demonstrated how a greater percentage of people prefer a sweeter flavor.  When the new Coke was introduced, massive complaints were received from loyal Coke drinkers.  It seems that the overall perception of the product had more to do with the demand than the actual taste. 

People don’t just buy the taste; they buy the can.  Years of advertising and positioning had  defined Coca Cola as a unique recipe: cola became Coke____perception was everything in the eyes of the consumer. Jack Trout, marketing author and seasoned consultant says,  “Positioning has to line up with the perceptions in the mind, not go against them. What people inside the company perceive as improvements, only cause confusion inside the mind of the prospect.”

Building your company or product’s perception positioningis one of the most stable, yet difficult market niche characteristics to achieve.  Being known for being the fastest and most reliable delivery, or finest quality and most elegant solution in your targeted market, can be the real reason a prospect picks up the phone to buy a similar product from your company.  Too few entrepreneurs and small business owners take the necessary time to consistently reinforce the market’s perception of either the product or the image that they are selling.  Positioning is a long-term effort requiring careful and deliberate planning strategy, plus an unwavering commitment to the long-term results.  Anything less undermines potential and will position your business into the unwanted niche of mediocrity and starvation.


[i] While domesticated animals share our space, they do not dominate our niche.  We live with pets in a symbiotic existence, and we coexist with rats and other rodents that (hopefully!) occupy a niche we cannot: sewers, attics, and crawl spaces.

[ii] Corner on the Market: “The Value of Marketing Value," Inland Empire Business Journal, November 1997.

[iii] “Think Your Company is Customer-Centered?  Think Again!”, Inland Empire Business Journal,  December, 1997.

[iv]“Jolt”  tried to cut out a spot by offering an extra dose of caffeine and sugar. I  have not seen this product around for a while. It did not endeavor to dominate the market; it attempted to differentiate the market.