NICHER STRATEGIES – A FEW CASES
An alternative to being a follower in a large market is to be a leader in a small market, or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. Here is an example.
Logitech has become a $1.3 billion global success story by making every variation of computer mouse imaginable. The company turns out mice for left and right handed people, cordless mice that use radio waves, mice shaped like real mice for children, and 3-D mice that let the user appear to move behind screen objects. It sells to DEMs as well as via its own brand at retail. Its global dominance in the mouse category enabled the company to expand into other computer peripherals, such as PC gaming peripherals, and Web cams.
IIinois Tool Works (ITW) manufactures thousands of products, including nails, screws, plastic six-pack holders for soda cans, bicycle helmets, Backpacks, plastic buckles for pet collars, resalable food packages and more. Since the late 1980s, the company has made between 30 and 40 acquisitions each year, which added new products to the product line. ITW has more than 500 highly autonomous and decentralized business units. When one division commercializes a new product, the product and personnel are spun off into a new entity.
Despite the fact that it has no celebrity endorses and does comparatively little advertising, New Balance has achieved more customer loyalty than any other athletic shoe brand because it is a truly distinctive product. New balance offers customers athletic shoes of varying widths. It targets the relatively neglected older market segment of fairly serious athletes age 25 to 45. Its low-key advertising appears in niche magazines like Outside, New England Runner and Prevention, and on Cable TV channels such as CNN, Golf Channel and A&E. Consistency and focus have paid dividends. With only 3.7% of the market in 1999, sales grew to almost a billion dollars by 2002, making the brand the number-three player in the category.
With smoking on a steady decline, Bradford, Pennsylvania based Zippo Manufacturing is finding the market for its iconic metal cigarette lighter drying up. Zippo marketers now find themselves needing to diversify and to broaden their focus to â€œselling flameâ€? With a goal of reducing reliance on tobacco related products to 50% of revenue by 2010, the company introduced a long, slender multipurpose lighter for candles, grills, and fireplaces in 2001; has explored licensing arrangements with supplier of flame-related outdoor products; and has acquired Case Cutlery, a knife maker.