Niche Marketing Matters

“It’s a small world, but I wouldn’t want to have to paint it.” – Stephen Wright

Yes, the world makes for a big pond to fish in but for most of us it is just too big of a market. Marketing dollars will be quickly wasted in a global market.

Instead, entrepreneurs need to think small or locally by focusing on the underserved or overlooked customers. Abandoned by the giant mass marketers, these lonely customers go begging for offerings that cater to their special needs. They are left to buy poor substitutes which leave them unsatisfied and unhappy.

Yet, when the courageous niche marketer listens and creates specialized products for them, the reward for the provider is customer loyalty. More than satisfied, these happy customers recommend the offering to others like themselves, which is the true measure of loyalty.

Thus, the more customer specificity built into a product or service the greater likelihood of success. Localization enables the entrepreneur to more easily defend his or her position in the market since the big competitors don’t care about the smaller market segments.

Globalization Shmobilization—think localization.

John Bradley Jackson
© Copyright 2009 All rights reserved.

Your target market is the customer group that will buy your product or solution; this specific market is made up of customers who want or need what you’re offering.

Historically, marketers have defined target markets using factors or demographics such as age; an example would be such 18- to 33-year-old males. This type of segmentation in the consumer marketplace is now considered inadequate, because of the new sophistication of the consumer and of our increased knowledge of segmentation.

For example, it was commonly thought that someone in their late twenties was an adult, likely married with children, and quickly headed to middle age. Yet, in the new millennium, we find that, while some people in their late twenties fit this profile, many others of the same age group still live at home and remain dependent on their parents for financial support. Often, they are unmarried and have no children. Yet, the old segmentation lumps these two disparate groups into one bucket.

Additionally, “cohort marketing”, a term originating in consumer marketing circles, defines customer segments using a common experience or multiple experiences shared by a group of people. They have a bond and a common set of needs or interests. For example, Apple computer users who choose not to follow convention with the Windows operating systems; instead, they take pride in the cult-like creativity and independence that Apple products offer.

So, what does this mean to the entrepreneur? It means that the target market needs to be carefully defined. Your product or solution needs to match precisely with a market segment that wants or needs what you offer. If you define your market too broadly, you might find yourself with a customer who is indifferent to your offering and may be suspect to move to the competitor that better understands his or her needs.

John Bradley Jackson
© Copyright 2008 All rights reserved.

My fifteen year old daughter asked me yesterday, “Dad, can we trade in Tara for a new puppy? We can sell her on eBay.” Tara is our eight year-old, slightly annoying, yellow lab. I was aghast at the suggestion. How could my daughter even consider trading in the old dog for a new puppy?

Welcome to the “new auction culture”. Cell phones are traded in every year or so. PCs last a couple years before we discard them and trade up to a faster microprocessor and bigger hard drive. Cars are leased for three years and then traded back in for a new model. When our email address starts getting too much spam, we just abandon it and get a new one (I should know, since I have nine different email addresses).

College students don’t keep their text books. When the semester is over they list them on websites that resell books such as Amazon (http://www.amazon.com) or Darple (http:www.darple.com). No sense hanging on to that unnecessary stuff when you can get cash instead. For that matter, college students also auction their old CDs, surf boards, and iPods. Who needs that stuff anyway?

Flash back a few years ago and you will remember when we repaired broken appliances and kept them for decades. My mom had an IBM typewriter—it was built like a tank and it worked for 30 years! We have a sewing machine that is over 60 years old—my wife doesn’t sew, but it is a family heirloom which is cherished. I think it is tucked away in a closet.

Daniel Nissanoff, author of the book “FutureShop”, suggests that a new “auction culture” will change the way we buy, sell, and use our possessions. According to Nissanoff, we have had an “accumulation society” for many years where permanent ownership of a product was very important. Today, we are adjusting to “temporary ownership” where we buy or lease the goods we want (some at prices we can’t even afford), and then sell them for optimal resale value when we tire of them.

Gone are the days of saving for years to make a special purchase and keeping it to pass down to the next generation. Instead, we just go buy it, use it, and discard it when the thrill is gone. No worries. Some might say this also applies to our jobs, since all we need to do is visit monster.com (http://monster.com) and get a new one. Or, if you tire of your current spouse, go visit eharmony.com (http://eharmony.com) to find a better one who is more compatible—can you say Sagittarius?

Welcome to the new normal. For my daughter’s generation, this is all they know: everything is disposable and replaceable—even the dog.

John Bradley Jackson
© Copyright 2008 All rights reserved.

A study by Yahoo! and Starcom/Mediavest Group offers some interesting insights about women and how they interact with the web. The survey interviewed 1199 women about how they use the Internet. Here are a few of the findings:

• The Internet is the preferred media among women and is the 4th most time intensive activity behind work, sleep and time spent with the family.
• The content most popular with women includes subjects relating to news, weather, finance and games - items not found in most popular women’s magazines.
• Women’s online spending habits are increasing and they are also using websites extensively to make decisions before purchasing in the offline world.
• Average time spent actively online each day was 3.3 hours.
• If offered only one choice as to a source of news, information and entertainment, 65% of women surveyed chose the Internet.
• 43% of the women surveyed make regular online purchases.
• 58% stated convenience as the major motivator for shopping online.
• The web is not a spare time activity for the women surveyed and it is accessed at various times of the night and day.

What this means to marketers is that women need to be recognized for the dominant decision maker in consumer and B2B markets that they are. Women outnumber men 51% to 49%. Women make the major decisions in households 75% of the time. Women account for more than 50 percent of stock ownership in the US and by 2010 they will represent 50 percent of the private wealth in America, or about $14 trillion. By 2020 that number is expected to rise to $22 trillion.

Step aside men, women are in charge.

John Bradley Jackson
© Copyright 2008 All rights reserved.

(Source: Yahoo! Inc.)

Some people will tell you that niche marketing can be like jungle warfare and that you must conduct battle like a “guerrilla soldier.” You may have heard the term “guerrilla marketing” used by others. Admittedly, this is a powerful image but I believe that this paramilitary characterization puts the focus on the wrong parties: you and your competition.

Niche marketing is about the needs of the customer, while having little to do with your fight with the competition. The essence of niche marketing is the partnership that is created between you and your target market segment. The best niche markets are populated by customers that have been overlooked or under-served by the competition.

The entrepreneur creates intimacy with the target market by intensely listening to the problems and issues of the customers. By investing this quality time with the customers, you become expert at solving their problems and you build a product that gives them what they need and could not get.

Your reward is customer loyalty and referrals; often you get higher prices, too. Your competition is not even on the radar.

Make love, not war.

John Bradley Jackson
© Copyright 2008 All rights reserved.

The market place may seem large, but it is really made up of many smaller markets with customers who share similar preferences or needs. These smaller markets are called market segments. Your target market is the market segment that you choose to serve.

Yet, to truly serve your target market, you need to be able to answer these basic questions:

Who are they?
What do they want to buy?
When do they want to buy?
Where do they want to buy?
Why do they want to buy?
How do they want to buy?

Until you can answer these questions fully, you don’t deserve their business.

John Bradley Jackson
© Copyright 2008 All rights reserved.

Chris Anderson’s business bestseller, The Long Tail, is widely quoted and the term “long tail marketing” is now as ubiquitous as sustainable competitive advantage, value proposition, and the other business clichés. With this cliché status, the term gets abused and misused.

What Anderson meant is that there is a new economy that provides an economic incentive for firms to offer many personalized or niche products instead of mass market products. This new economy exists because of technological advancement in the supply chain including manufacturing and distribution, along with new efficiencies in marketing largely due to the Internet. Think of an expanded market where there is more opportunity for little products.

For example, look at this excerpt from his book at the market for books: “The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. Consider the implications: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are. In other words, the potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity.”

What this means is that that although books are still sold through the bricks and mortar bookstores, there are just as many books (and soon to be more) sold through the web stores. The economics of the books business is like the music business in that it is a “hits” business with an exaggerated 80/20 rule—for a book to be in the traditional bookstore it has to be a best seller or on its way to being a best seller. If a book does not sell well they ship it back to the publisher. It is a little known fact that 70% of the books shipped to the bookstore don’t sell and are shipped back to the publisher. Books are a very low margin business and now you see one of the reasons why. Books are heavy—just think of the shipping costs of going back and forth.

This means that the traditional bookstores cannot even think about carrying titles that sell in lower volume, so they are forced to overlook what is soon to be half over the total available market. This leaves half the market open to the online booksellers and self publishers like me.

Thus, to truly address the whole book market, booksellers have to adjust their channels of distribution, advertising, and promotion to reach the online buyers. This is why Barnes and Noble, Wal-Mart, and others now have on-line bookstores. This allows them to carry the other book titles that their customers want.

For a self published author like my self with a precisely targeted readership, I can skip the bricks and mortar stores entirely and do a respectable business on the web. I connect with my readers using Web 2.0 tools such this blog, web distributed articles, web-based PR tactics, pay-per-click ads, and word-of-mouth.

And it works!

John Bradley Jackson
© Copyright 2007 All rights reserved.

Simply put, a market is a group of buyers that are willing and able to buy your product or solution. A market is made up sub-markets or “market segments”; market segments are groups of potential buyers who have similar wants, needs, experiences, or problems. In fact, a wise man once said, “There is no market; there are only market segments”.

Your target market is the market segment that you choose to serve. To truly understand that market you need to be able to answer these questions:

- Who are they?
- What do they want to buy?
- How do they want to buy?
- When do they want to buy?
- Where do they want to buy?
- Why do they want to buy?

Successful entrepreneurs target the under-served or overlooked markets where there is little or no competition. This segment, while small, is still big enough for the entrepreneur to make a profit; simply put this is niche marketing. The key to niche marketing success is the intimacy that you have with the customer needs, problems, and issues. I call this being a “knowledge broker”—- this means being an expert about the customer’s day-to-day life.

This knowledge allows you to create a dialog with them. In time you can build a constituency made up of customers who believe in what you do. If they refer you to other customers you have achieved an advocacy which sustains your business. This is when you know that you have made it.

Turning your customers into your advocates is not easy. It can take blood, sweat, and tears to get them. Your referrals are the best indicator of a bull’s eye hit of your product in your target market. Interesting enough, you may be surprised when you get them since they may not be who you targeted in the first place.

For example, when I wrote my book First, Best, or Different (shameless plug) I figured my book would appeal to a broad spectrum of readers including small business owners, marketing executives, and avid business book readers. While this has proven true, my raving fans are not people that I had necessarily targeted.

My longtime landscaper and gardener may be my biggest advocate. He so enjoyed my book that he has been trading his services for my books of which he gives to friends, family, and other customers. Although I had heavily researched the business book market, I had no idea that a small business owner like him would connect with my message.

The lesson for me is simple. It is not what I think that counts. It is what the customer thinks, feels, and does.

John Bradley Jackson
© Copyright 2007 All rights reserved.

Positioning is what the customer believes about your product’s value, features, and benefits; it is a comparison to the other available alternatives offered by the competition. These beliefs tend to based on customer experiences and evidence, rather than awareness created by advertising or promotion.

Marketers manage product positioning by focusing their marketing activities on a positioning strategy. Pricing, promotion, channels of distribution, and advertising all are geared to maximize the chosen positioning strategy.

Generally, there are six basic strategies for product positioning:

1. By attribute or benefit- This is the most frequently used positioning strategy. For a light beer, it might be that it tastes great or that it is less filling. For toothpaste, it might be the mint taste or tartar control.
2. By use or application- The users of Apple computers can design and use graphics more easily than with Windows or UNIX. Apple positions its computers based on how the computer will be used.
3. By user- Facebook is a social networking site used exclusively by college students. Facebook is too cool for MySpace and serves a smaller, more sophisticated cohort. Only college students may participate with their campus e-mail IDs.
4. By product or service class- Margarine competes as an alternative to butter. Margarine is positioned as a lower cost and healthier alternative to butter, while butter provides better taste and wholesome ingredients.
5. By competitor- BMW and Mercedes often compare themselves to each other segmenting the market to just the crème de la crème of the automobile market. Ford and Chevy need not apply.
6. By price or quality- Tiffany and Costco both sell diamonds. Tiffany wants us to believe that their diamonds are of the highest quality, while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices.

Positioning is what the customer believes and not what the provider wants them to believe. Positioning can change due the counter measures taken at the competition. Managing your product positioning requires that you know your customer and that you understand your competition; generally, this is the job of market research not just what the enterpreneur thinks is true.

John Bradley Jackson
© Copyright 2006 All rights reserved
Please visit my website at www.firstbestordifferent.com

A wise man once said, “There is no market; there are only market segments”.

Simply put, a market is a group of buyers that are willing and able to buy your product or solution. A market is made up sub-markets or “market segments”; market segments are groups of potential buyers who have similar wants, needs, experiences, or problems.

For example, there is a market made up of coffee buyers, but it can be divided into many market segments. One coffee buyer market segment is the group of coffee drinkers who will pay two times the normal price of a regular cup of coffee to enjoy the coffee found at Starbucks. Starbucks has a grip on its market segment that is so powerful that coffee drinkers endure long lines and ridiculous prices for the chance to drink an overly bitter and burnt cup of coffee.

Think I am full of it? Consumer Reports just completed an independent test comparing the coffee at Burger King, McDonalds, Starbucks, and Dunkin’ Donuts. Guess what? McDonalds won! But I digress. And, it does not matter what I think anyway; it is what the Starbucks market segment thinks, since they vote with their dollars.

To truly understand a market segment (i.e. why Starbucks buyers must have their “Grande Latte” every morning) you need to be able answer the following six questions:

- Who are they?
- What do they want to buy?
- How do they want to buy?
- When do they want to buy?
- Where do they want to buy?
- Why do they want to buy?

After you answer these questions, you are ready to serve your target market. Starbucks anyone?

John Bradley Jackson
© Copyright 2006 All rights reserved.
Please visit my website at www.firstbestordifferent.com