Wednesday, December 19, 2007
Should businesses invest in niches or wait for trends?
Developing niche products and services are where many businesses are investing today in an effort to grow their profits. Finding that niche is sometimes easy, as it currently is in the healthcare market (offering an individual plan is the niche to be in since group plan offerings are reaching saturation), but most often finding a new niche is an arduous process. My question is will we reach a point where so many niches have been created that they become too small to reasonably support? The book Microtrends argues that we’re moving away from an economy that produces for the masses to one that produces for many small niches. While I agree with that assessment I also argue that our society has become so entangled in finding the cheapest possible source that it becomes seemingly more difficult to personalize products and experiences and stay competitive. Think big box stores vs. mom and pop shops. Microtrends goes on to say that when a niche reaches one percent of the population a trend is born. Perhaps the solution is to ignore the niches and wait for the trends. Of course that’s a passive approach and could result in a company missing out on a trend because their competitor has already built its reputation around the niche and created immense customer loyalty while doing so; leading us back to the classic marketing book Positioning which argues that a company first to market with something is most likely to remain the market leader. What are your thoughts?