niche

Selecting a Niche – Part III – the economics

differentiation, Marketing, Positioning, Product Management, Sales

Today I will speak about the economics of selecting a niche.

We have already identified multiple advantages of selecting a niche and creating a perception of being different.

Once you have identified the niche the fundamental economic advantage you get is that you don’t have to try to send your message to everyone in the universe. Now your message is only going to a select few who meet the criteria of your ideal customer in the niche. So we have brought in a new term with respect to marketing to your customers – ideal customer.

So a niche could be people who like red eggs. Instead of looking at the whole of the United States to start doing your marketing, you may want to target red egg eaters in Old Town Alexandria, who are in the age group of 55-65 years. You may target this because your poultry farm is in VA so logistically its easier for you to address the market and then because your red eggs have higher protein, people over the age of 55 might be a good market to check.

So now your challenge is to find a way to identify how many of the above age group people live in Old Town Alexandria and how do you reach them.

Obviously you need to look at the other aspect which I had mentioned in my earlier posts. Which is – is there a market in the niche. So if you realize that there are only 200 people who fit your profile then may be it may not be a market for you if your poultry farm is producing 6000 eggs a day while it maybe a worthwhile market if your farm is only producing 20 eggs a day.

So keep this in mind always – you need to identify a niche in the market but you need to also see if there is a market in the niche.

If this market suits you then you now only need to be targeting this specific set of people at a defined frequency in the media of their choice. So instead of doing broad level advertising on radio or tv you could now target a media which is more tuned to this population in Old Town Alexandria.

This way even a very small budget can go a very long way to reach your ideal customer.

Till next time then.

Carpe Diem!!!

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!!!