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Marketing / Niche Marketing – the best strategy for Small Businesses

The mass market is splintering into fragments, and now is an opportune time to figure out which fragments are yours. The most effective strategy for a smaller business is to concentrate on a particular segment or niche in the market - and develop a strong reputation for a specialized service or product. The more specialized and geared to customer needs the better.

How to compete with the big guys

As a small company often it's hard to compete with the large companies. However it is important to observe the large firms and see where the gaps are, what parts of the market they not servicing. Small operations can then offer specialized goods and services attractive to a specific group of prospective buyers.

Study the market carefully and you will find opportunities.

Niche marketing is really refining a product or service and answering particular and specialized needs of customers. "A business must differentiate itself in ways that are important to the customer," notes Philip Kotler, professor of international marketing at Northwestern University. "Small firms are uniquely positioned for niche marketing. If a small enterprise sits down and follows the principles of targeting, segmenting and differentiating, it doesn't have to collapse to large companies.

"A business can actually be more profitable by going for the niche rather than the volume," he elaborates, "and new technology presents many opportunities for new niches."

Researching your market – Who to aim at

Researching your own company's niche, consider the areas in which your competitors are already firmly situated then consider where an opening might exist for your product or service. Try to find the right configuration of products, services, quality, and price that will ensure the least direct competition.

A well-designed database can help you sort through your market information and reveal segments you might not see otherwise. For example, do customers in a certain geographic area tend to purchase products that combine high quality and high price more frequently? Do your small business clients take advantage of your customer service more often than larger ones? If so, consider focusing on being a local provider of high quality goods and services, or a service-oriented company that pays extra attention to small businesses.

Niche Examples

A photographer may specialize in taking school or kindergarten photos, a translator may specialize in legal translations. A pastry cook may specialize in very colorful birthday cakes. An employment agency may specialize in hotel staff, or legal staff. A fund raiser may specialize in religious institutions. A PR firm may specialize in the Telecom/Medical/ Literary markets.

How to do It

Clifford and Cavanaugh – management consultants present a series of steps companies can take to adopt niche marketing for themselves:

* Compile a comprehensive list of your prospects and customers.

* Narrow the list to a profitable group you believe you can serve better than the competition.

* Create a profile of the traits common to these customers, such as sales volume or location.

* Use this profile to tailor products, services and advertising

to your niche market and qualify new prospects.

* Be prepared to experiment with several niches before finding the one that fits your company best.

Successful Niche Businesses -

§ Are customer- rather than sales-driven.

§ Develop new products with the end-user in mind.

§ Concentrate on advertising to - and generating repeat sales from - not just any customer, but a small, credit-worthy, qualified group.

In summary, to become big – think specific!