Small and large businesses use different approaches
to successfully navigating their markets based upon the resources available to
them. Large businesses reach for larger target segments while smaller
businesses focus on attracting a smaller group of motivated customers. Niche
markets offer an entry position for small business to start building their
customer base before expanding into new niches.
Small
Business Does Well in Underserved Markets
Small businesses are likely to succeed in markets
currently not being served sufficiently by other businesses. They do so through
creating brand recognition among those that desires their unique types of
products and services. Highly motivated
customers will recognize the brand the next time they consider making a
purchase.
For example, it would be extremely difficult for a
small business to compete against a large retail outlet by selling disposable
pens. However, through selling unique pens, customized pens, embroidered pens,
and handmade pens they can offer products that larger stores wouldn’t find
lucrative enough to carry in their national chains.
Customers will remember the specialty store as the
easiest and most convenience place to purchase their chose products. The
customer weighs and balances all of their options and knows that such gifts are
easier to obtain from the customized provider. There is little reason to drive
from store to store trying to save a few dollars when a specialty store has
what you want.
Small
Business Can Expand Revenue through Complementary Products and Services
Once a small business reaches a sustainable level
within their niche product/ service market they can consider adding additional products
and services to expand revenue streams. In the example of pens, the business might
also consider complementary niches such as unique stationary and paper.
Selling similar niche products provides
opportunities for overlapping benefits (Bruggeman, et. al., 2012). Pens and
stationary are categorically connected in consumer minds and if they are
looking for high quality pen and paper they have a place to obtain these items.
The two types of products regularly attract the same types of people.
Niche business also allows for successful niche
marketing that improves the success rate of the business (Rankin, 2007).
Marketing efforts can be focused specifically toward those customers who are
most likely to buy a particular product.
Such efforts cut down on waste and low investment returns in business
expenses.
Bruggeman, J. et. al. (2012). Market positioning:
the shifting effects of niche overlap. Industrial
& Corporate Change, 21 (6).
Rankin, M. (2007). Niche marketing allows advisers
to build habitat for business success. Employee
Benefit Adviser, 5 (12).
