Selecting a Niche – Part II

differentiation, Marketing, Positioning, Product Management, Sales

In the first post on Selecting a Niche – I spoke about Selecting a niche in the market and finding a market in the niche for your product. In Product Management this is like the fundamental step for you to look at

While one of the reasons of selecting a niche is to be able to differentiate, the other reason is to avoid the big players who are already present.

Its not a good idea to be a better Honda or a better SONY or any other market leader. They can be a better themselves by themselves and they have the marketing and financial muscle to outlast any competition.

When selecting a niche you should be looking at a market which is big for you, but not big enough for the market leader to be bothered about that small market, that it puts its energy in competing with you. So a convenience store like Seven-Eleven has a niche where it charges the prices it wants and is profitable. It does not try to compete with the Walmarts of the world.

Given what I mentioned above – the size should be large for your capability (market in the niche) but should be small enough for the leader to ignore (niche in the market). Then you start differentiating. The kind of products and product packs that are available in a Seven-Eleven will not be found in a Costco or a Walmart.

And you will know you are being successful when people start comparing their offering with yours or as the late Dr Sean Stephenson used to say “Anti-Fans” start talking something bad about you and customers will call the category by your product/service name. Once that happens, you will polarise a certain section of the market to always keep coming back to you and your selling costs will come down and your profitability will go up.

At the end of the day the job of a person in product management is to ensure that she can create a category which she can own with her product

Till next time.

Carpe Diem!!!

Selecting a niche…. create a differentiation

differentiation, Marketing, Positioning, Product Management

Whenever you try to create a differentiation – it is always with respect to a market.

The red egg differentiation will not matter to a person who does not eat eggs.

I talk multiple times about Joe Polish and Dean Jackson. The reason I am so impressed with them and their podcasts on ilovemarketing and morecheeselesswhiskers is because they explore this concept in so much depth.

You will hear a lot of marketing people talk about identifying a niche in the market, but fail to say the immediate statement after that. Is there a market in that niche

This is the most critical aspect when you decide to segment the market for a niche.

When I started my career in selling process control equipment, we had an amazing product which was also very expensive. Indian industry at that time was still new to the idea of micro processor based process control equipment.

Our product was very good good for controlling complex processes. However there were very few companies who really had the need for such a powerful equipment. And we didn’t have a range of products.

While there was a niche in the market for controlling complex processes, there was no market in the niche…. because there were very few companies with a need for such a product.

Eventually this product could not take leadership even though we came out with this amazing product much before anyone else.

So while finding a niche in the market is important, to be able to differentiate and stand out. You should always see if there’s a market for you in the niche.

Till next time.

Carpe Diem!!!

Perception- III

differentiation, Marketing, Positioning, Product Management, Sales

These parts on marketing are short because I like to get a bite size idea across in the time while you wait in the line at Tim Hortons or Starbucks – max two minute read.

In the first post on this topic, I spoke about why perception about your product or service can make such a big difference in the premiums you command and the profitability you can make.

In the second post I wrote about the downside of taking a position in the market especially when there’s a major technology shift – from horse carriages to automotive.

One of the key agendas of marketing is to attract customers to you. But there’s an unsaid implication in that statement.

Marketing should help you attract the customers you want and repel those you don’t want.

Like the red egg above in the picture, people who don’t like to have red eggs will get repulsed by it and will not buy it. However the people who love red eggs will go to any length to get them.

You may sell a much smaller volume than the white eggs, but you could be making much larger volume. So many iconic brands like Harley Davidson, Apple, don’t have a large market share in terms of volume but they lead in terms of profitability.

Whatever perception you want to create however cannot be at the cost of the quality of the products or services. Good marketing is not a substitute for a poor quality product.

If you have an excellent quality product or service and then you choose a narrow market and create a perception of being different then you can take home a much higher profit.

Till next time.

Carpe Diem!!!

Perception – II

differentiation, Marketing, Positioning, Product Management

Yesterday I spoke about the advantage of creating a Perception / Position in the mind of the customer and how a clear positioning can help you get premium.

Since my focus is on Product Management in technology products and services, within Marketing, I always like to focus on the differentiation and positioning one can create for the product.

There are an immense number of examples I will share with you on this in the future posts, showcasing how technology products/services own a category.

This post however looks at the downside of creating a strong positioning.

Once you take the position in the mind of a customer, it becomes very difficult to change that perception.

If we look at history Digital Equipment was the company which was positioned as the “mini” computer company. When the mainframe computers were associated with the IBM’s of the world Digital created a perception of being different with a “mini” computer. DEC PDPs were the computers which any company longed to own. They owned the Mini Computer category.

DEC however no longer exists today. The reason for that is – DEC was the MINI Computer company. When computers became personal, people didn’t associate DEC with that market and they got completely annihilated.

When you own a product category and the technology related to that category is nearing “end – of – life” then it becomes very difficult to migrate into a different category. This happens because of 2 reasons in my opinion:

Internal – the management of the company still tries to push their existing products/services because the are incentivized on pushing that.
External – because the position you hold is strong in the minds of the customer – they can’t see you in a different position and don’t believe you have those capabilities

Most managements don’t read the writing on the wall, some read it but are not able to take a tough call.

For a marketer, its a double edged sword especially in the technical world where the technology is changing so rapidly. Should they work and put the effort into creating and owning categories or should they be a generalist and try and attract everyone.

I will still place my bet any day on creating a positioning / perception/ differentiation so that your product/service can stand out and customers see you defining that space. Then making a sale become easier, making profits become easier.

There are other aspects to creating the differentiation which we will take in future posts.

Till next time.

Carpe Diem!!!