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Why Serve a Niche Market?

Posted on October 18, 2011 By admin No Comments on Why Serve a Niche Market?

Entrepreneurs who see a direct correlation between the size of a target market and the probability of success miss the opportunity to serve healthy niche markets. Niche marketing not only provides startups with an opportunity to launch the business successfully, but can also help them grow into major players in a larger market. Healthy, profitable businesses such as Traulsen, Aman Resorts, Zamboni and Peet’s Coffee and Tea all serve thriving niches.

Niche players share a common set of traits. These include a deep understanding of their customers and their customers’ needs and the ability to stay engaged with those customers. Ideal niche market companies should consistently produce quality, innovative products and possess a genuine regard for the well-being of their employees. Serving a niche allows companies to focus on meeting the needs of a smaller group of customers without compromising their chance to increase the appeal to a broader market.

Look at some successful niche players–some that have gone on to become household names–to see how they achieved, and continue to achieve, success.

A Specific Interest
The iron is one of the oldest and most common household items. It’s a commodity product that generally retails for less than $30. That makes the prospect of successfully selling irons priced from $900 to $2,500 farfetched, if not outright ridiculous. Nevertheless, that’s exactly what Laurastar has done since 1980, selling more than 2 million really high-end irons to households in 40 countries. Switzerland-based Laurastar serves a seemingly small market niche of people who share one interest–pressing their clothing professionally at home. While forgoing a large market in favor of smaller one may not sound logical to venture capitalists, Laurastar has proved that serving a smaller subsegment of the market with special needs can be profitable and sustainable.

In some cases, niche players concentrate on serving a combination of subsegments of a market with similar interests or lifestyles. Aman Resorts doesn’t target just sophisticated, wealthier travelers. Aman Resorts’ niche market has a lust for faraway places, an interest in cultural authenticity and a desire for environmental friendliness. The company, which operates properties in Asia, Europe and U.S., has done away with the over-the-top pretentions associated with other luxury brands (think marble reception areas) in favor of small, distinct establishments. Each property is designed to be in harmony with its surroundings and the prevailing local architecture.

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