Building the differentiated, niche business
When businesses suffer from price competition and products and services become a commodity, niche businesses can thrive purely by differentiating.
Price competition means your products or services have become a commodity.
This drives prices down and removes the loyalty and the relationship between a business and it’s customers.
It’s happening everywhere.
And you don’t want to be a part of it.
If you do, you’ll need deep pockets or you will go broke, as profitability goes out the window.
Price becomes everything. Keeping pace with your competitors becomes a game.
Improving yourself to mediocracy, as Youngme Moon, in her Book, Different, Escaping the Competitive Herd, suggests.
If that is happening to you right now, you need to do something about it. You will want to plan and envisage future possibilities.
If you are starting a business from scratch, it will be the same.
Watch Seth Godin in the Art of Marketing below, telling us about the mass market and how it is changing, with the mass in the middle of a distribution curve with the edges leaking – it is at the edges where the niches are, giving you the opportunity to differentiate your business.
A niche business looks to create product or services that are different, or smaller, but more profitable segments of the market. Difference and aiming to dominate that vertical. A business that others can only imitate, but never compete.
It’s not always easy to do. It’s a brave person who wants to stands out from the crowd.
Niches are people focused
It has to be people focused. Enough to stop people in their tracks. To shock them with the unexpected.
Now craft that into a business that provides a service or product. It doesn’t matter if there are 10, 20 or 100 competitors. If your idea of competition is just to compete so you can keep up with the competition, then nothing will change. You just stay just like them and get the same results.
Niches don’t have to compete on price
If your business is based on matching your competitors, or copying them, even benchmarking against them, change is just incremental. That’s what defines a commodity and just leaves price as the only value to compete with. Like any electrical item to day, it can bought from just about anywhere for the cheapest price online.
There’s no monopoly in a commodity. All you can do is either be the cheapest and try and sell lots more than your competitors.
Niches seek market domination
Larger companies, seek to dominate the market. But to be a dominant player means to target around 40% of market share if they can. Then aggressively guard that position through cutting prices or out-advertising when their competitors try to build market share. In Australia think breakfast cereals – Kellogs , Uncle Toby’s (Nestle) and Sanitarium products. Their domination is being eroded by Home Brand products (mainly Aldi) and some premium breakfast cereal products. The premium cereal products don’t compete with the dominant brands but eat into their market share. They chose to compete differently and nibble away at the majors. There’s still a living to be made at the margins.
Niches are different because they stand out
Choosing your customer group to target by narrowing your focus and then seeking to create a meaningful experience for them is your goal.
From my online marketing experience I can guarantee you that it is easier to market a business online when it is focused on a narrower niche and then build up the content or media that connects with the audience ( or tribe ) looking for you. Website traffic just goes up and up.
Create the sort of business customers or clients are looking for
Try to be everything, and you compete with everyone else and get lost in the crowd.
Narrow your focus, choose the customers you want, and work smart to connect with them and draw them to you. Creating something that customers want to talk about.
It might mean doing less. If you engage your customers in a way they don’t expect, they will certainly recognise it when they see it.
If you are already being hammered on price, then what are you going to lose? Start now.
Disclaimer. I’ve yet to see a website become an overnight sensation. It takes focus, hard work, attention, thinking, a budget and time to make this happen. Mind you if you have a $5million plus budget we could have a good go at it.
What do you think?