Thinking Small Can Be Really Big

By the beginning of the 1960s 88% of American homes had television. There were three networks. Consumers had only three choices of what to watch at any given time of the day or evening before the programs ended until the next morning.

For advertisers it meant that by just placing their commercials on the three networks they could get their message in front of 88% of the country. It was the era of mass marketing.

In today’s market, however, the most lucrative opportunities come from narrowing the focus of your advertising message. We are in the era of niche marketing.

With niche marketing, instead of being all things to all people you are something specific to a targeted, well-defined group of people.

When you do that, people know what you stand for. That knowledge translates into them identifying with you. It is the fundamental lesson of branding adapted to narrow and vertical markets.

Consider some of the biggest successes in niche marketing.

Southwest Airlines remains profitable today when other airlines are filing for bankruptcy or asking for government bailouts. When Southwest was started 35 years ago it ran short, inexpensive, no-frills flights direct from only three cities; Dallas, San Antonio and Houston. By doing so it exemplified the very definition of niche marketing which is “to provide a product or service in a small portion of a market that is not being served by main stream products or service providers.”

Gradually Southwest added more direct city-to-city destinations. But the low-price, no-frills experience remained. Today Southwest flies to 62 destinations. By first thinking small, Southwest has become very big.

Today Wal-Mart is a global giant with more than 6,500 stores, employing 1.8 million people in 15 countries. But back in the 1960s, when general stores were being replaced by big chains, businesses like K-Mart and Target decided to open only in the burgeoning suburbs that sprang up around major cities, Wal-Mart took a different approach.

The Walton family developed a niche by opening its stores in small rural communities. It was a smart strategy. There were far more small communities to expand into than large suburbs. When the K-Marts and Targets ran out of large suburban markets, looking at smaller markets was a step in reverse. For Wal-Mart however, having a large chain of very profitable stores in smaller markets gave them the resources to eventually expand into the larger markets. When they did they opened Mega Stores that pulled customers from K-Mart by the masses.

For Wal-Mart, thinking small became extremely big.

Another way to develop niche markets is to look at ways to segment the product or service you sell. Think about walking down the cereal aisle at your grocery store. Where once there was just one type of Cheerios, now there are a dozen different Cheerios. Each different Cheerios is niched to appeal to a specific segment of the mass market. Some people are the Honey Nut type; others are the Berry Burst type and so on.

Take a look at your business. How can you actually increase your sales by thinking smaller? What market niche is ideally matched for your product or service? How can you take the products or services you currently offer and separate them into groups for small niche markets?

The most common ways to develop a niche market are:

1. Fill a void where there is a want. The examples of Southwest Airlines and Wal-Mart are excellent case studies of success that started out in niche markets.
2. Create a product or service to match a specific interest. Think about the specific market segments that buy your product or service. Then breakdown your marketing to be specific for each segment. This could be by age group, geography, special interests, or lifestyle.
   For example: In the 1980s I marketed a magazine about fly fishing. Ours was the leading magazine in that special interest market. Growth was a challenge. But, by developing a new title focused specifically on fly fishing for trout, we had a product that specifically spoke to a very vertical segment of the fly fishing market. As a result of developing this niche, we increased sales 24% the first year and 63% the second year.
3. Watch what your competitors are doing, then develop a way to do it better. In 1990 I experienced just how powerful this could be.
   I was in charge of marketing for a manufacturing company. We introduced a new breakthrough product and had a tremendously successful first year, recovering all the development costs and realizing an extremely profitable first year ROI. We owned the market. Then a competitor purchased a few of our products, analyzed them, and came out with their version of our product that was easier to use and lower priced. In our second year we no longer owned the market.

The marketplace in 2008 is perfectly suited for niche marketing for the following reasons:

1. Expanded advertising mediums include cable, the Web, and social marketing venues, giving you more ways to match your message in media niches.
2. Information about consumers is more comprehensive and precise than ever before. You can target customers by using an exact combination of behavioral and demographic information.
3. Personalization and variable data printing make it easy for you to customize the messages you send in print advertising such as direct mail.
4. Sophisticated database software lets you capture and store enormous amounts of information about your customers, their buying habits and product preferences. By using it wisely you can find what is valued most and use the information to improve your customer relationships.
5. The Internet makes it possible to sell a niche product or service on a global scale. By establishing your Web site with the correct key words and search engine optimization, potential customers who match your niche will find you.

If the current economic market has you worried about declining sales, perhaps it’s time to create growth by thinking small.

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