The Hindu Business Line : Find a hollow to fill

SAP has written special software for IBM mainframes. Linx Printing Technologies caters to the industrial inkjet market `which has so far escaped the attention of the big battalions of the electronics industry'. Direktbank, a Dutch bank, decided to focus on the elderly: `a market other bankers ignored'. Bavaria identified the need for an alcohol-free beer, because `people want to drink and drive'. And Pickwick, a Dutch tea brand, began producing `tea with specific tastes such as strawberry, melon, orange, lemon and so on'.

These are only some of the many examples recounted in Handbook of Niche Marketing, edited by Tevfik Dalgic, from Jaico (www.jaicobooks.com) . Niche means a recessed space or hollow, such as a cavity in a wall for a statue. In marketing parlance, niche is "a small market consisting of an individual customer or a small group of customers with similar characteristics or needs," defines the book. Importance of niche marketing far exceeds the attention it has received in academic journals, curricula, and textbooks, rues Suresh Sethi in his foreword to the book. "It would not be an exaggeration to say that the topic of niche marketing itself has been somewhat of a niche market," he observes wryly.

Niche marketing provides high barriers for entry as long as the niche is well defended, says the book. "By successful specialisation and focus, niche marketing prevents threats of substitute products or services... Nichers can charge premium prices." Niche strategy may be top-down, that is, from mass to niche markets; or bottom-up, moving from single niche to multiple niches. The latter approach helps companies become big by playing in many small markets.

The book advises SMEs (small and medium enterprises) to identify their distinctive competencies and nourish the same constantly - `whether it is a unique process or product, quicker response time, or intimate knowledge of the customer'. Also, to take the complexity out of international business transactions, SMEs can think of `synergistic partnerships with carefully selected foreign business'.

Today's realities call for leapfrogging, declares the book. "The overwhelming export success of smaller, high value-added exporters discredits the conventional wisdom that firms ought to pursue export opportunities cautiously, in a series of incremental steps."

In the world of nichers, you'd meet the ultrafocused - the supernichers - such as Union Knopf, the world leader in buttons, which makes 2,50,000 varieties of buttons. Aeroxon leads in another superniche - non-chemical devices to fight household insects; "its main product, the fly strip, has not changed in 90 years, and it holds 50 per cent of the world market."

Ethnic nichers are the third force, one learns; national firms are the first force, and international firms, the second. An example of ethnic nicher that the book discusses is INS (Intercultural Niche Strategies), a New York-based marketing company. "Using data from the Immigration and Naturalisation Service, a multilanguage staff, and a network of ethnic media and retail outlets, INS is working with major music labels to help drive incremental US sales for such world artists as Japanese jazz pianist Akiko Yano, Native American artist Buffy Sanite-Marie, and Spanish-Galician bagpiper Carlos Nunez." The site www.nichestrategies.com informs, "INS has successfully opened distribution into Japanese bookstores, Asian-Indian spice shops and Irish gift stores to reach targeted ethnic consumers."

The final chapter is about the `gay' niche. Interestingly, "American Express has built an entire program around the gay consumer, including the development of gay-specific advertisements for its promotional campaigns." And Office Max, a retailer of office supplies, which began advertising on gay Web sites, justifies its move, thus: "We're here to serve our customers. We don't care whether they're white, black, yellow, gay, or lesbian... "

A filling `hollow' read.

http://BookPeek.blogspot.com

D. Murali