SBTC, ETR: 2 mins
The Niche Business
Targeting a product or service at a niche market segment has several advantages for a business (particularly a small business)
Less competition – the firm is a “big fish in a small pond”
Clear focus – target particular customers (often easier to find and reach too)
Builds up specialist skills, knowledge and market expertise
Can often charge a higher price – customers are prepared to pay for expertise
Profit margins often higher
Customers tend to be more loyal
The main disadvantages of a niche business include:
Lack of “economies of scale”
Risk of over-dependence on a single product or market
Likely to attract competition if successful
Vulnerable to market changes – all “eggs in one basket”
We have seen over the last few years a number of business failures so who knows what the future holds?
Improving competitiveness for the Future
What could business operating in niche markets do to see the opportunities or issues that will help to improve their position in the market and how can they plan for it.
The STEEPV business model helps by providing a starting point for strategic discussions about the future. It refers to Social, Technological, Economic, Environmental, Political and Values factors.
Developing Strategic Insights.
Create a STEEPV model to see factors that will impact the business now and in the future.
Consider the appropriate type of transformation (Radical, Architectural, Modular, Incremental – see our website for more information).
Analysing products or services and impact on business operations.
Using insights from the STEEPV model create strategies that align the development of products or services to address the insights gleaned from the STEEPV analysis.
Scour the market and new sectors to see how businesses are identifying new ways of combining processes and technologies to develop solutions. For instance a manufacturer of bespoke shoes currently hand makes them. Manufacturers now using 3D Printing to create the same more improved bespoke shoes.