Know-How Exchange : Strategy

I would define niche marketing as to the target niche you are selling to. Really, low volume and higher margin is a sales or other business strategy, not a marketing strategy.

You as manufacturer, will be marketing to a retailer who has the niche or target you identify with. Last time I skied Beaver Creek (Vail area) we gasped at a chandelier costing over $250K. (The store also had $10 items, but its not their "sweet spot") So, the manufacturer (artisan) has targetted homeowners that can afford a fixture the price of an entire average house.

I would say it is a niche strategy. But, I believe you need to distill your niche down a bit more than "designer"

What I want to avoid is thinking I have put in place a niche marketing strategy when I've not. I read that specialization is at the heart of niche marketing.

I suppose if you are *trying* to reach the whole market but have some differentation from competitors, that's NOT niche marketing.

Niche marketing I understand is decidedly *trying* to reach only some particular part of the whole market. True?

Lots of lighting manufacturers could make products sold on the basis of a unique style. That's a kind of specialization. But if lots do that each with their respective styles, are they involved in niche marketing? I'm not sure they do *if* everyone is competing against each other.

Obviously the manufacturer is appealing to those end- users who prefer a certain style. But if all manufacturers are "throwing mud (their particlar style of mud) at the wall and hoping some of it will stick" as it were, that probably is not niche marketing.

I'd hate to think I put together a nich marketing strategy and it be nothing more than mere differentation. I'd hate to get the concept of differentation mixed up with niche marketing. Which I think is possibe.

I'm seeking some clarity.

Put it like this-- and these are random thoughts, you are targetting household with x income, living in a home of x value, contemporary(?), art driven (unique designer), quality and style conscious? You can define it further as designer means a lot to many. Think clothing. Would it appeal to the person wearing BeBe or Talbot? A home that is artisan (frank Lloyd Wright) or Mies Van De Rohe, or Warhol?

I originally thought you wanted to define your niche as "high margin, low volume", which was my first response.

I'm not a marketer or an expert, but I'd say if the competition you have is low, you are avoiding lots of competition, and you decided that be the case, you are likely niche marketing. I think the competition issue is the real cruncher on this. That's the test I think, more or less. Or am I getting it wrong?

Futher: If I walk into a lighting centre and it's full of lamps and they are divided into 7 styles, are the respective manufacturers competing against each other?

Say I come out with a really radical lamp, very distinctive, would I be in the same market as the others? Some might argue you would be catagorised into one of the styles and what that means regarding competition.

I'm trying to figure out whether a lamp that might be considered creative and inventive in it's styling is a fit subject to base a niche marketing strategy on.

Does Yugo compete against Lexus? The buyer of a Yugo in all likihood would not consider a Lexus-- for many reasons. Someone who wants a sports two seater won't consider a mini van. Yet they are all cars.

Just as a contemporary lamp buyer won't look at something traditional. The contemporary buyer who'd choose the $1000 contemporary fixture won't be drawn to the $29 Walmart contemporary fixture. With all the styles in your typical lighting store-- that store has a niche. When I sold lighting as a manufacturer rep, one way we qualified the retailer was asking what their "price point" was. that wasn't the only question, it was one.

The lamp isn't a niche-- creative or not. Your niche is the type of person who could buy a creative and inventive styled lamp - and could afford your price point.

To add to your other comment. Go deeper, if you are marketing in an area where competition is low-- you need to define why the competition is low. Competition markets to the mass retailer who markets to xxx ignoring those who want ... Satisfying that need is the niche you are marketing to.

Let me suggest one more thing. As research to define what I am saying, walk the Highpoint Market -- here is a list of exhibitors, click high end lighting and browse their websites-- especially someone like van Teal. Even Van teal has become main stream. https://www.highpointmarket.org/Exhibitors.aspx--Spring show is in April so you'll have plenty of time. Book early, the town sells out. People move out of their houses and rent them to visitors.

What was frustrating to me as a rep was seeing so much innovative product at market and yet retailers pick the same thing, store after store-- with few exceptions. Its like the retailers don't want style and cutting edge-- they want what is easy to sell. As a rep, you have to pull thru sales to get their attention and prove their customers will buy.

I was just thinking of a better way to explain this.

Supposed I decide to get into the buggy whip business. There is very little competition in this biz. Few,so I can get a good profit on the few I sell. Little competition -- avoid competition as you say -- does that mean I have defined a niche? No. I have targeted an area of little competition but not the niche who will buy my whip. Just lack of competition or choosing a void doesn't mean I will have sales. My niche is when I identify the people who own buggies, horses and want a whip.

Understand, to have a plan to create a product that is not a "me too" item is very good-- its a great reason for a differentiator. Look out your window, every building you see needs lighting. One of my first classes on this gave the knee jerk answer to knowing if you have defined niche. Who will you sell to (niche)? If your answer is "everyone" the answer is wrong. That is when you know you have to drill deeper.

In writing your biz plan, do a SWOT analysis of your competition and market analysis. That is where you define the need, areas competitors have neglected to fill a need and how you can fill that need. Then, things start bubbling up as to who and you will get define your niche.

Yes, mass marketers who are ignoring xxx can mean that if you identify and concentrate on selling to xxx you are administering a niche marketing plan. Of course, as matter of logic you will have few competitors unless you are competing against a bunch of other niche marketers who discovered xxx niche market.

This seems important. If we go back to the lighting store - if a customer has only eyes for one of the styles, then I guess the other styles are not competing. But that's in the MIND of that particular customer. Of course he/she is but one of many who have the same eyes.

But, and this is critical, this does not mean that any of the styles in the store are appealing to a niche market. A product in the store is only appealing to a niche market if the customer themselves are being ignored by most of the regular lamp manufacturers.

So, I guess the key thing to ask myself is, is there a market out there which is not being currently serviced. If I could find one, then I'd be niche marketing. But to simply design an innovative lamp is no guarantee that my market will be a niche market. Is this getting closer?

What you need to do is make something remarkable... worth talking about (rather than average lamps for average people).

So what about your lamp, or your company, is worth talking about? Why is it different? Is it the price? The design? The energy-efficiency? Is it made entirely out of recycled materials (a "green" lamp)? Handmade by women in Africa starting their own businesses? Do you donate 25% of your profits to charity?

To cut and paste: "A product in the store is only appealing to a niche market if the customer themselves are being ignored by most of the regular lamp manufacturers. is there a market out there which is not being currently serviced. If I could find one, then I'd be niche marketing."

This is not true but you are getting closer. Niche marketing is identifying your lamps are targeted toward hip, style and quality conscious consumers making x $ a year, etc. Now there are many other people targeting that niche. People who make high end kitchens and appliances, car manufacturers, clothing manufacturers, other lighting manufacturers. They, as you are still niche marketing. You market lazar sharp to that niche -- it has nothing to do with being the only one. There is room for more than one sales wise.

Just as in the lighting store and the niche above, if the style isn't "hip, style and quality", it won't appeal to your target. They will not consider it for purchase. They'll walk past cheap, traditional and those poorly made. So they narrow their selection in their mind to those that are. And they will choose one-- it may be a subjective vs objective decision.

Now finding something unique and different is your differentiators. It is why they choose to do business with you. That is not a niche, its a differentiator or a USP, unique selling proposition. You need to define all.

Again, walk a show like High Point. Or click thru the exhibitors on the net. You'll see a variety of product that does not get to most retailers. Like the consumer, you need to define the realtor services your niche. Find one in your area, befriend them-- a product that aligns well with the niche that store serves will help them attract customers. The more research you do on this in the front end the more you assure your success.

As I understand it, niche marketing is about trying to minimise competition, or looking at it another way, being able to compete with some chance of success.

Of course, there is always some competition, but the essence is that you are adopting a strategy that allows you to compete without being "hit for six" or muscled out of the market by the competiton.

So, niche marketing is essentially about competition, not that you will never have any.

But you can look at this another way, you can shift your focus on the market. The niche market have wants that mainstream manufacturers are not properly fulfilling, but the niche manufacturers are. This market must exist and be identified. But there is a sense that you are focusing your efforts on the niche market because you cannot successfully compete against the mainstream manufacturers, or you don't want to try doing that, or you don't need to do that -whatever.

As to differentiation: You are differentiating when you choose to meet the needs of the niche market rather than mainstream. However, strictly-speaking you are not competing in the mainstream market.

You can differentate your product in the niche market, just as you would in the mainstream market.

Also, back to the lighting store: Chances are that most products are in the mainstream market from what you say. It all depends on the nature of the differentiation. I suppose it's possible that product differentiation (product in it's widest sense) is of such a nature it takes it, as it were, out of the mainstream market into the realm of a niche market.

Anyway, I must be careful into not thinking product differentiation necessarily amounts to minimising mainstream competition, which I belive is what niche marketing is essentially about. And when it is done properly, you will be serving ac market outside of mainstream in some way or other.

Okay, well, I think what niche marketing is, is sorted out. For myself, in it's fundamentals, it's to do with two things: less competition and a restricted market.

Not sure whether to have a niche marketing plan, but I think I must consider it. And whatever the marketing plan, define exactly what it is that I'm offering. I must build up a picture of my market. Look for what I can do well. Ensure the competition is not overwhelming.

Thanks.

Rich