General Business and Finance Blog

Introduction

            Focused (or Market Niche) Strategies differ from other generic market strategies in that it concentrates most if not all of its attention on a narrow piece of the total market.  The niche can be defined by geographic uniqueness, by specialized requirements in using the product, or by special product attributes that appeal only to niche members.  The key to this strategy is to remain focused on your target niche and not allow yourself to attempt appealing to everyone.  A company can lower its costs tremendously by limiting its consumer base to a very specific target market.  This strategy is extremely useful to small or medium sized companies that lack the capital to take on multi-national corporations.  The costs of starting a business with a clearly defined and specific target market are far less than those one would have when launching a global product or service.

The Idea in a Nutshell

            To say that one person came up with the market niche strategy would be a stretch.  The truth is this strategy has been utilized since the beginning of civilization, whether it was known by those utilizing it or not.  In ancient times, the largest segment of the population was poor laborers.  This is not the market one sets his sites on when attempting to sell luxurious silk gowns, rare jewels, or the latest invention, trinket, or toy.  The small well-defined segment of nobles was the target niche of ancient times.  One might think that a lot has changed since then, but the truth of the matter is companies such as Godiva Chocolates, Chanel, Gucci, Rolls-Royce, and Haagen-Dazs successfully utilize differentiation-based focused strategies targeted toward particular segments wanting top-of-the-line products and services who are willing to spend more to get the best.  The target market does not have to be wealthy; this is just one example. 

A focused or niche market strategy is one that provides products or services that uniquely appeal to customers in a narrow segment of the market, rather than attempting to appeal to that particular market as a whole.  Community Coffee, of Louisiana, holds a mere 1.1% share of the U.S. coffee market, but it has reported sales in excess of 0 million by appealing to a narrow well-defined market.  In addition, Community Coffee holds a 50% share of the coffee market in the Gulf-Coast region where it is distributed.  The internet is quite possibly the perfect medium for launching a market niche strategy.  Businesses such as Google, E-Bay, and Match.com went from being ambiguous companies to household names in a matter of years. 

The Top Ten Things You Need to Know About Focused (or Market Niche) Strategies

1.            When employing a focused market strategy, keep your consumer-base down to a well-defined and specific segment of the market, avoiding the temptation of trying to appeal to broad interests.

2.            When utilizing a focused market strategy, beware of competitors trying to match your firm’s capabilities in serving the target market.  They will attempt to find effective ways of appealing to your buyers with imitation products or services.

3.            A focused market strategy is best employed when the specific target consumer-base is large enough to be profitable and offers good growth potential.

4.            Your firm stands a greater chance at being profitable if you offer different products and services to a specific group or segment of consumers that have unmet preferences.  These customers will be loyal to your business for catering to their unique needs, and they will think of your company first when others ask them where they got such a specific product or service. 

5.            Ferrari markets its 1,500 automobiles sold in North America every year to a clientele of only 20,000 highly lucrative car admirers.  Only those in the highest tier of this exclusive group were contacted by Ferrari for a chance to put their names on the waiting list for one of the 20 .1 million FXX models.

6.            A quick a decisive strategy should be employed when targeting a narrow segment of any market before consumer preferences tend to drift.

7.            A hyper-focused strategy is best maintained in those industries in which the leaders do not see having a presence in the niche is critical for their own success.  This reduces the risk of smaller businesses having to battle it out against some of the industry’s strongest competitors for a share of the market.

8.            Over-looked or undervalued market segments are prime territories for employing a laser-focused strategy.  Because these consumers are undervalued by other competitors in the industry, the chances of your consumer-base remaining loyal for the long-term are greater.

9.            Use caution when entering markets where segments may become so alluring it is soon flooded with competitors, augmenting conflict and disintegrating segment profits.

10.            A laser-focused strategy can be actualized if there are social and cultural differences within one community that may call for changes to be implemented in a product or service. This invariably produces a niche market.

The Video Lounge

http://www.youtube.com/watch?v=PHhfDkLrOpA

Guy Kawasaki discusses the key success factors that differentiate a strong niche marketing strategy from a poor or run-of-the-mill one.  The two main areas he stresses to be strong in are the ability to provide a unique product or service to the customer and for that product or service to provide value to the customer.

My Take

I think focused or (market niche) strategies are extremely valuable today.  This would be the ideal strategy to implement for any fresh college graduates looking to start an entrepreneurship.  In addition, the internet offers an abundance of channels to get a small firm up-and-running without much startup capital.  This lack of startup capital is another reason why utilizing this strategy is favorable when entering a market or industry with large corporations.  Some of the main points I got out of this were to keep your target market down to a specific and narrow market segment,  market segments that are overlooked or undervalued are the prime meat for employing a market niche strategy, and that this strategy is best maintained in those industries in which the leaders do not see having a presence in the niche is critical for their own success.

References

Jaquier, B. (2003). Focus and niche strategies. Retrieved from http://www.ecofine.com/strategy/Focus and Niche stategies.htm

Marketing niche strategy. (n.d.). Retrieved from http://www.smallbusiness-marketing-plans.com/marketing-niche-strategy.html

Mendoza, M. (n.d.). Focus on your niche. Retrieved from http://www.powerhomebiz.com/vol62/niche.htm

Niche strategy advantages. (n.d.). Retrieved from http://www.marketingtitan.com/niche_strategy_advantages

Thompson, A, Strickland, A, & Gamble, J. (2010). Crafting and executing strategy: the quest for competitive advantage. New York, NY: McGraw-Hill/Irwin, 156-160.

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Contact Info: To contact the author of “Top Ten Management on Focused (or Market Niche) Strategies,” please email Gabriel B. Ordoyne at w0449274@selu.edu.

Biography

David C. Wyld (dwyld.kwu@gmail.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/), a hub of research and news in the expanding world of competitive bidding. Dr. Wyld also maintains compilations of works he has helped his students to turn into editorially-reviewed publications at the following sites:

Management Concepts (http://toptenmanagement.blogspot.com/)

Book Reviews (http://wyld-about-books.blogspot.com/) and

Travel and International Foods (http://wyld-about-food.blogspot.com/).                

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Every person now seems to see the Internet as the Business Holy Grail… ha… ha… ha!
What we find when we look deeper is greed… greed… greed. Sorry, no exclamation. If you believe different then you are naive.
The internet first gave us all great hope that a new dawn was beginning. That here was a great place to be, where everyone could be equal. Where every person could communicate honestly with each other. Where everyone could set their stall to making money any way they desired. That certainly holds true for the crooks and scammers. Sorry, but again, no exclamation.
We get bombarded with emails from what are called opt in lists. We see something we like, so we sign up with our email to get a regular sample of a supposedly new product or information that will change our lives for the better. You must be joking!
Our email address then gets sent about the internet to various joint venture lists, known as JV lists. And then we are called the simpleton list. The easy touch list and many other names.
What is happening now, and always has happened with the internet, reminds me of the old wild west of America, during the Gold Rush days. The old pan handlers had this inner desire to strike gold, much the same now with many people having a desire to win the lottery. Or start a home business online with their great idea. Every person wants to obtain great wealth quickly.
Those old westerners went on a great walkabout, searching here, searching there, searching everywhere for the business holy grail of quick, easy money. They were mostly hard working honest men, desperate to better themselves. And that is what made them easy pray to the vultures of greed. Just like now on the internet.
However, where there is money there is always ingenuity and greed. Some people realised that the gold prospectors would need equipment to search for gold. Some realised that tools would be needed, so they started a tool business and made a lot of money. Some realised that food would be needed, so they started a food business and made a lot of money.
But, the person who probably made the most money was the person who invented the trousers, called jeans. Well… except for the odd miner who struck gold. The people who made great wealth quickly and gave the rest of the gold prospectors hope for the future.
Is that now the same with the internet? Do we see, or more likely read about, some person gaining great wealth because they sold their internet business… and then believe we can do likewise? So how do we start to make money online? That is the burning question we would all like to know. Because what will probably happen is that an internet scammer will get us first.
The greatest desire with most modern people is probably to start their own home business. A business working from home that will give them their own financial independence. A home business where they can make money selling internet goods. However, where do we find such a home business idea that can generate great wealth for us? Or even just a regular above average business income.
First, we need to find something to sell. Next, we need to get lots and lots of internet visitors to our website. Oops, I should have probably mentioned the website first. How can we sell goods online without a website? But, then again, how can we sell something if we do not get visitors to our website? How can we sell something if we do not have something to sell on our internet home business? It is all starting to get rather confusing now. What came first… the egg or the chicken? Who cares. We must keep focused on our business idea. What business idea? I have not found one yet!
The above paragraph probably applies to the vast majority of people who have a great desire to break away from their mundane life and start their own business. However, what most people need to realise now is that internet selling does not only apply to the future. It applies to the here and now. If you want to be successful, then you need to learn to sell online. You need to keep focused and hopefully avoid the internet scammers.
Once you have an idea for your home business and have set it up, you then need to know how to get visitors or traffic to your website. The search engine Google seems to have a monopoly in that area. There are other search engines, like Yahoo and MSN, but for now, Google is king.
But for how long, I wonder? Nothing lasts for ever. Most large businesses start to lose a direction from their original roots with their thirst for expansion and over-expand. That usually makes a business ripe for takeover. A rising business will eventually reach a pinnacle. It can either stay there or meet another rising business on its way down.
What makes Google a lot of money is their ingenious Adwords system. You agree to pay Google a certain amount of money for certain types of keywords connected to your business. Then, when people search Google using your keyword a small ad box will appear, describing your product. If they click on the ad box your website will appear, where you can hopefully sell your product. You will also pay Google the agreed price for people clicking on your ad.
Would it not be fantastic if we could find an idea where we could obtain free ads from Google? A business idea that brings us thousands of visitors to our website from Google for free. Such an idea would save us thousands on ads. It could also make us extremely wealthy.
In 1999 a New York physician did come up with such an idea. Although he was a medical practitioner, he always had a dream of having his own home business. He wanted to work from home selling products instead of having the daily stress of attending to public health problems.
The business idea he brought to the internet originated in the offline business world. It was kept secret for many years by a select few business people, to ensure they made millions from it. What those business people did and still do, was use a simple method to obtain free ads in top class magazines. Ads that would normally have cost their business thousands were obtained free! And 100% legal.
By 2007 this New York physician had amassed a personal fortune of $75million with his free Google ads idea. But he always kept quiet about his free ads system.
Now retired from business, he decided to release his idea in e-book form. You can read how his business idea became a reality by downloading his ebook. It contains 124 pages with step-by-step clear instructions on how to obtain free Google ads.
This is one home business idea that turned into a multimillion dollar empire. The real deal.