Niche Marketing: Narrow, Not Small

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An article published today in Advertising Age really resonated with me. It makes the case that the maturing marketplace, combined with the hyper-connected, in-control consumer “has created a seismic shift from one-size-fits-all mass markets to millions of markets of self interest.” That assessment carries huge implications for retailers who are trying to move product that was once a specialty, but is now a commodity. Strategy consultants Booz Allen Hamilton explain it this way:

As every market matures, choice increases. Then competition drives up quality and convenience to the point at which offerings become commoditized. The only businesses that then thrive are those that move beyond “me-too” or incremental offerings to marketing more-relevant and more-differentiated products and services. The only way to accomplish this is to focus on a narrower target.

Technology & The Long Tail

Technology has played a major role in facilitating this shift. Marketers are now able to micro-target specific groups, engage customers with more frequency and intimacy, and customize to consumer specs. Moreover, technology has enabled consumers with the tools to seek out suppliers that offer just the thing they want.

Think about it. If you are a retailer focused on selling lots of stuff to lots of very different people, you are probably fighting a loosing war of diminishing margins, market share and profitability. On the other hand, brands that have figured out how to excel at attracting and keeping loyal a narrowly focused niche will probably continue to do well. And why is that? Once you, the customer, has experienced having your ever-increasing levels of self-interests met by a niche provider, you have a hard time going back. For example, why would I continue to go back to a retailer for accessories that I know from previous experience, they probably will not have (not even on their website).

As even a senior Wal-Mart official recently said, “no customer today will stand to be treated as part of a mass market anymore.”
This is a major disruption and marketers who fail to respond to it quickly will suffer. According to Advertising Age, the value propositions of those who ignore niche marketing…

“…will be less relevant than those of competitors. For those slow to adopt niche marketing, the future also is bleak. Attempts to recoup share will be difficult because competitors will have preemptively established closer customer relationships.’

A number of brands and marketers have embraced niche marketing. Names like Target, Crocs, Red Bull and American Girl. The all have the same objectives as any other marketer, but they have sensed the disruption and have responded by finding a new way of going to market.

Narrow, not Small

The other thing that has changed is what niche marketing really means in today’s environment. It’s still “the targeting of a more narrowly defined customer group seeking a distinctive mix of benefits”, but niche markets are not the “marginal opportunity” that they were once viewed to be. Today, niches are viewed much more positively.

In today’s marketplace, niches are flourishing. Some niche brands are generating hundreds of millions in sales. Sometimes, narrow niches, fueled by mavens and connectors, become the next big, disruptive thing. The big point of the article is that niches should not be equated with small. Instead, think of narrow. Then target very specific groups who will relate to and find differentiation in your offering. At this point, you are no longer a commodity and you can increase your margins by charging a premium. Do this over and over with different products and services, and you can generate volume and growth that makes up for your narrow targets.

Smaller targets, larger focus
Ten years ago, the medium was still the message. Eight years ago, we could still think of the 4P’s — product, pricing, place, promotion — as essentially independent strategies. Five years ago, everyone started to buzz about customer-relationship marketing. About two years ago, we got really excited about digital-marketing tactics and started to apply them without any real strategic purpose. All this has changed.

So what’s really new about the new niche marketing? It’s realizing that while our targets have to narrow, our definition of marketing communications has to broaden. Today, everything communicates what a brand stands for, all the time.

It’s like the old saying: If you are on the wrong train to begin with, every stop along the way is the wrong stop.

The article closes with 10 principle to harness the power of niche marketing:

  1. Position your brand as narrowly as is economically possible.
  2. Become the specialist that anticipates the needs of your target.
  3. Rapidly work with the target niche to co-innovate.
  4. Set as your goal such consumer centricity that the target niche will want to co-brand their identity with yours.
  5. Live by a higher standard of ethics.
  6. Embrace a business model and metrics that grow the most valuable assets of the new niched economy.
  7. Reap first-mover advantage by learning how to identify a niche of opportunity.
  8. Re-imagine your role as that of entrepreneurial founder of a special interest group.
  9. Forget push marketing; excel at pull marketing.
  10. Realize your brand is now “media” competing against all other media

What do you think? Does this make sense to you ? Can you think of companies that could immediately benefit from leveraging niche marketing?

(Source: Advertising Age)

6 comments so far

  1. Philippe on

    That’s a great post. It makes a lot of sense. I see other examples of this strategy with companies like innocent drinks (fruit juices and smoothies) and La fille d’O (lingerie)

  2. Ryan Karpeles on

    Makes perfect sense, actually🙂 Reminds me of a quote from Seth…

    “Only problem is, if you’re well-rounded, you can’t cut through anything. You need to be sharp as a knife. Sharply defined.”

    The entire post is here:
    http://sethgodin.typepad.com/the_dip/2007/05/sharp_not_a_spo.html

    I think we’re going to see a LOT more niches been sought out and marketed to. The mass market structures are dying. It’s time to identify and deliver on the wants of individuals, rather than the desires of crowds.

    Great stuff as always🙂

  3. […] the plan in how you offer products and services. No longer will two groups suffice for targeting, narrow targeting is the way to go. If you have any additonal suggested ways to target customers or prospects, let us […]

  4. best niches on

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  5. Micro Niche on

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  6. […] the plan in how you offer products and services. No longer will two groups suffice for targeting, narrow targeting is the way to go. If you have any additonal suggested ways to target customers or prospects, let us […]


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