Niche specialist roles


The key idea in successful nichemanship is specialization. Here are some possible niche roles.

End-user specialist:

The firm specializes in serving one type of end-use customer. For examples, a value-added reseller (VAR) customizes the computer hardware and software for specific customer segments and earns a price premium in the process.

Vertical-level specialist:

The firm specializes at some vertical level of the production-distribution value chain. A copper firm may concentrate on producing raw copper, copper components, or finished copper products.

Customer-size specialist:

The firm concentrates on selling to either small or medium-sized or large customer. Many nichers specialize in serving small customers who are neglected by the majors.

Specific-customer specialists:

The firm limits its selling to one or a few customers. Many firms sell their entire output to a single company, such as Sears or General Motors.

Geographic specialists:

The firm sells only in a certain locality region, or area of the world.

Product or product-line specialists:

The firm carries or produces only one product line or product. A firm may produce only lenses for microscopes. A retailer may carry only ties.

Product-features specialists: The firm specializes in producing a certain type of product or product feature. Rent-a-Wreck, for example, is a California car-rental agency that rents only “beat-up� cars.

Job-shop specialists:

The firm customizes its products for individual customers.

Quality price specialists:

The firm operates at the low or high quality ends of the market. Hewlett-Packard specializes in the high-quality, high-price end of the hand calculator market.

Service specialist:

The firm offers one or more services not available from other firms. An example would be a bank that takes loan request over the phone and hand-delivers the money to the customer.

Channel specialists:

The firm specializes in serving only one channel of distribution. For example Soft-drink Company decides to make a very large-sized soft drink available only at gas stations.

Strategies for entering Markets held by incumbent firms

Carpenter and Nakamoto examined strategies for launching a new product into a market dominated by one brand, such as Jell–O or FedEx. These brands, which include many market pioneers, are particularly difficult to attack because many are the standard against which others are judged. They identified four strategies that have good profit potential in this situation:

1. Differentiation:

Establish a new brand as a credible alternative by positioning away from the dominant brand with a comparable or a premium price and heavy spending in advertising. Example: Honda’s motorcycle challenges Harley-Davidson.

2. Challenger:

Challenge the dominant brand as the category standard positioning close to the dominant brand, with heavy advertising spending and comparable or premium price. Example: Pepsi competing against Coke.

3. Niche: Positioning away from the dominant brand with a high price and a low advertising budget to exploit a profitable niche. Example: Tom’s of Maine all-natural toothpaste competing against Crest.

4. Premium: Positioning near the dominant brand with little advertising spending but a premium price to move “up market� relative to the dominant brand. Examples: Godiva chocolate and Haagen- Dazs ice cream competing against standard brand.