Niche, noun: a distinct segment of a market. A niche market is built in the market and focus on a specific product. So the market niche defines the specific product features aimed at their satisfying specific needs in market, and price range, production quality, as well as the demographics that is to be impacted. (wikipedia, 2007) Niche market is a more narrowly defined group which basis on getting interests. In a nutshell, niche marketing is not just a single product promoted, also involves one part of a market by serving. (Kotle) A niche can be partitioned off a larger market in many different ways. It can consist of a certain population group, such as aged 25-35 of women; a certain consumer psychology group, such as golfers; and specific needs, for example someone who need a solution for back pain. (Moc Muise, 2010)
So as we can see, the niche market is highly professional markets which try to live in the competition from numbers of supper companies. General speaking, there are at least five features in perfect niche market. First one is a narrow product market with a wide area, which has some ‘small gap’ for niche market. Second is a company from niche market has potential for sustainable development. Next is the company already has a good reputation to compete. Follow one is they should not afraid of strong contender. At the last, if there is not has a ruler in the industry, it will be a better environment for niche market. (ryan, 2011) From above features, we can see when a company has exact target customers into niche market, they can more effectively and completely satisfy demands, which will bring more high marginal revenue.
As we can do a broad observe, almost industry have niche market. There are two different companies in different countries which are examples for niche market. TCL is a successful electronics company in China. At the first the abbreviations is “Today, China, Lion” at the moment it stands for “The Creative Life”, (baidu, 2002). They define themselves to “an emerging power in China’s wave of globalization”. TCL founded in 1981, it is one of the largest consumer electronics enterprises in China with a global presence. (TCL.com) Why it is a successful niche market’s company? From 1981 to 1991, TCL has been created of the brand, registered their trademarks, and began to establish a marketing network in China. At that time, they was mainly sale phone. (TCL history, 1991) In 1992, the large-screen TCL King TV was developed and produced.
Although the color TV industry giants have been existed at that time, such as Panasonic, Sony, the large-screen TV was still be a gaps in the Chinese industry, so TCL was successfully gained market recognition. Then the same time, they began to introduce the CI system, thus they became one of the earlier companies to implement the CIS 1991. (TCL history, 1998) Now, we can easily know the reason for TCL’s success, at the first, before they stage of rapid development, TCL’s brand was established and nationwide sales network was built. Secondly, TCL found a commercial opportunity that was ignored in the majority of the Chinese market.
In addition, they have adequate technical potential to development, when TCL insist on researching and developing CIS technology. Moreover as can be seen they are not afraid of a rat race in themselves defined. Those successful reasons are total compliance with the niche market company’s features. Nowadays, TCL has become a powerful international company, in my opinion TCL should consist to focus on technology research and development in the future. From the report, the company is expected to reach RMB 1.8 billion in 2012. Their major focused research areas will be “the next generation of home appliances products and 3C integration-focused digital home technologies”. (TCL R&D, 2009)
Another company in niche market is Holland and Barrett, it is the leading retailer in UK, the main products including vitamins, minerals and herbal supplements, major sale cities and towns across the United Kingdom and Ireland. Holland and Barrett has more than 140 years of development history. At the beginning, it was a grocery store and sold groceries and clothing that bought by Alfred Slapps Barrett and Major William Holland in 1870. Until 1920, the company was merged again, it changed name to Holland & Barrett, at the same time it was established Heath and Heather by Samuel Ryder. And then, the healthy store developed to 181 stores in 1992 to more than 600 stores now. (Ryder, 2010) As the largest health care products retail company in UK, Holland and Barrett major sells various natural health plate for the increasing life quality requirements in daily life.
Their products for different ages, effect, gender, such as the famous products Grapessed Extract capsules and Odourless Garlic capsules, the first one is called the best oral cosmetics for female, second one has a natural anti-bacterial effect and anti-virus effect that can enhance human immunity. (sinablog, 2011) In addition, as a retail industry, Holland and Barrett ever change their price, there are consistent keep the original values, thus their can improve low prices every day. (Holland and Barrett)
At present, the health food markets have become more and more intense, as a niche market company, we can find the most important thing for Holland and Barrett success that is brand. They established a well brand in UK with a good reputation, and also they through times company’s merger and development that bring more potential for financial resources with growing development prospects. Similar to TCL, Holland and Barrett has almost features for niche market’s company. For the future, Holland and Barrett should provide more segments products.
Compare with mass market company Amway, the most famous direct selling company in US, it uses network marketing to sell all kinds of products, primarily in the health, beauty, and home care markets. (Amway) Due to the mass market is used to describe a large number of consumers to use products with a specific industrialization, (Yang, 2011) Amway’s sales market is more widely that means they have more profit potential. However, just only contrast the health care products, Holland and Barrett has low entry costs with higher profit margins. Amway Nutrilite is major health care brand in Amway, which only sales about 60 products. (baike amway)
The date is significantly lower than Holland and Barrett. In order to the numbers of products for sell to clear consumer groups and clear regional, niche market company just cost low entry will with higher profit. Moreover compare with Boots that is a local leading pharmacy-led health and beauty retailer company in mass market. (Boots) Boots has its roots in 1849, they started in pharmaceutical wholesale business. It does not like Holland and Barrett has focus on a small range but comprehensive breakdown products of health care. Boots sell a variety range of products, including beauty, fragrance, health, toiletries, etc. So they have occupy a large market share in UK, which is in a certain extent to threat Holland and Barrett market.
From those two examples can be seen, the niche market companies might have to face those problems, a low volumes in industry, too much reliant on a single product, and there are possibly swallowed by big companies. However, any companies in niche market can hit off all problems, if they adhere to development the above 5 features in niche market company. There is an explanation I disagree, which is niche market equivalent to weak demand and poor sales of the product, and it should develop to mass market. This was proposed by Wired magazine’s chief Chris Anderson in 2004. (MBA, 2010) Firstly Niche market is to seek some wispy or ignored business opportunity in every industry.
They have special product and customer to development. Secondly it is not every niche market company should be changed into mass market. As TCL, due to the developing economic in China, it has a bright prospects for development. For electronics industry, since 2011 China has accession to the WTO, the electronic products manufacturing industry in China has gradually shifted from the domestic market to export market. (Eugster, 2008,6) Among of goods, color TV’s sales more than 45 million. (Wenku, 2002) In 2011, the Shanghai New International Expo, Chinese electrical industry has showed their sufficient strength and competitiveness in the world market.
With those developing economic, we can see the electronics industry has adequate development potential in China, so in my opinion TCL does not need to into mass market, they should keep focus on new technology products development in niche market. However, faced with strong domestic and foreign competition, and possible be divided market share, I think Holland and Barrett has a not optimistic situation in future. From my view, they should adding more services for their customers such as medical’s massage, or they can start seek for another opportunities to development health care.
At the least, in summary, the niche market company has lots of developing potential in every industries, the most important thing to developing the company is seek “a small gap” for sustainable development. Following is building an company’ brand and a good reputation, which can help them not afraid of strong competition from super corporates.
Amway. Access date 2012/02/16 Amway: www.amway.com
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