The Advantages of a Niche Company
Creating a successful business is an extremely difficult task, especially when there are already so many large, well-established businesses you’ll likely have to compete against. For most small businesses, starting out as a niche company can help avoid competition, build better brand loyalty, and provide other advantages in marketing.
One example of a successful niche company is Lululemon Athletica, a retail brand that specializes in athletic yoga wear and accessories for women. When the company started in 1998, technical wear for yoga practitioners was a very niche market. Fast forward to today and the company has not only brought in a net revenue of $2.1 billion for 2015 but has also projected growth in sales for 2016 – all while staying within its niche market.
Another example of a successful niche company is Whole Foods Market, which spotted the demand for organic food. They capitalized on the niche market by targeting specific individuals who were more aware of nutritional facts and would more likely pay a premium for the health benefits of organic food. And while today the organic food market has become less niche and increasingly more mainstream, Whole Foods Market continues to grow and expanded by focusing on special diets food.
Here are 3 examples of why niche companies like Lululemon Athletica and Whole Foods Market succeed:
Competitive Advantage. One of the benefits to starting or owning a niche company is the competitive advantage. By tailoring the product or service they offer, niche companies can create a more effective overall advertising campaign. While this may lead to the exclusion of a large number of consumers, targeting a niche market allows a business to focus on the consumers whom will most likely buy the company’s products or services.
Brand Loyalty. Niche companies typically garner stronger brand loyalty because they appeal to their customers’ demographics, inclinations, preferences, and lifestyles. By having such a defined target market, niche companies can establish market positioning, and develop niche marketing campaigns to appeal directly to their target consumers. Niche companies can also better address customer needs because they are only focused on providing a very particular type of product or service within a specific market segment.
Expertise & Reputation. Unlike large, more diversified companies that try to manage many tasks adequately, niche companies only focus on managing one task extremely well. This singular approach allows niche companies to develop a strong reputation as leaders and experts in their industry. By understanding who their customers are and how to better serve them, niche companies succeed in surpassing larger and often more well-established businesses.
While many businesses start out as niche companies, focused on providing a very particular type of product or service within a specific market segment, only some remain niche companies as they grow. Once you’ve successfully won over a core audience, you can redirect efforts towards reaching wider audiences and growing your business.
Learn how you can establish a niche company in the U.S. by contacting us today.
