Know Your Niche - Effective Business Strategy
Sometimes, we can be
“all things to all people”. At others, businesses
find that they’re better off serving a particular “niche” (or segment) of the
market.
Typical examples of niches are:
·
Low-cost airlines
·
High-end cars
·
Specialist equipment/clothing
·
Saga
·
Bridal shops
·
“High Net Worth” banking services
Niche businesses serve a particular customer segment and
focus on satisfying the needs of that segment.
They may have a competitive advantage that allows them to do this (e.g.
specialist knowledge, specialised production processes, raw material source or
other advantages).
If your business is struggling, or not doing as well as it
could, there could be a number of reasons, one of which is whether you should
be focussing on one niche, or whether you’re concentrating on the right
niche. There are plenty of businesses which
have changed niche and been successful. Some
businesses are large enough to have products or services that appeal to
different niches. Micro-finance banks,
for example, specialise in tiny businesses (usually one person) like roadside
kiosks in developing countries. Some car
manufacturers make cars ranging from
low-cost right through the scale to “upmarket” (Toyota has low-cost cars and
the “Lexus” brand as its “luxury” model).
Before you decide whether you should focus on a niche, consider:
·
Product
·
Price
·
Place/Convenience
·
Promotion
·
Buyers
·
Returns policy
·
Knowing your customers personally
Segmenting customers is a good way to work out where your
niche(s) is/are. You may have more than
one. “Segmenting” means dividing your
customers up by characteristics (depending on the business you’re in). These characteristics could be:
·
Lifestyle
·
Age
·
Income
·
Education
·
Technology-awareness (i.e. do they buy over the
internet?)
… or any others.
Ask yourself:
·
What do my buyers want?
·
What drives their decision-making (price,
quality, depth of range, availability, expertise in store)?*
·
Where does my “natural ability” lie?
·
How can I meet those needs? What needs to change?
·
Is it “bankable” (will a bank lend this business
money)?
·
How much will it earn me (is it worth the
effort)?
*Note:
people may be prepared to pay more if you can supply QUICKLY or if you can
provide EXPERT ADVICE.
Develop your reputation in that field. Get customer endorsements in particular. Word of mouth is the best advertising. Ask
customers to recommend you when they can. Make sure your customers KNOW
where/how/why you differ. No point in
setting everything up and no one knowing about it.
Develop a competitive advantage. Look at Amazon’s success in selling over the
internet. They started as an online
bookstore but now stock a huge range of goods at (mostly) competitive prices, have
a great returns policy and a prompt, reliable delivery service. Replicating all of this would require a
competitor to make some extremely costly investments. Look at where any competition fails because of
missing out on one basic issue (e.g. returns, poor service/product,
price). Could you differentiate yourself
here? Make it expensive for the
competition to copy what you do.
Has the niche got
sufficient
revenue and growth potential. If
it can’t, think again. What needs to
change?
See if it works. If not, why not? Was your research good enough? Is the chosen niche too small, do you have to
make too much effort to attract minimum levels of business?
Is it a case of “right product, wrong place/price/promotion or something
else? I know one business which sold a
good quality product out of tired-looking premises which didn’t attract
buyers. What had happened was that their
buyers expectations had changed: the
“new generation” expected modern premises. A small investment in refurbishment and new
signage made all the difference.
Another client was offered the opportunity to enter a new
area which required some heavy up-front investment. There
was a definite demand, the money was there to invest, and we could hire in the
right expertise. However, when we ran
the numbers, we found that the final increase in income just didn’t justify the
outlay and effort that were required.
I have spent more than half my life working in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy and work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services.
Labels: Career, Customer Care, Productivity, Selling, Strategy
posted by William Martin @ 16:39
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