Is your brand in a niche or a rut?

There is a good deal of talk about niche branding and can be an extremely effective and profitable strategy for many businesses. There is a lot of comfort operating in a niche – brands understand their sector, environment, audience and competition intimately; there should be few surprises. There is a danger however: time moves on, and if the brand stewards are not fully aware of happening inside and outside of their niche, they may become trapped and the niche becomes a rut.

How do we define a niche?

  1. It has a narrow and well-defined audience. In B2C, this may be defined by specialist interest, age and gender, geography etc. for B2B it may be limited by technology, capacity, geography, legislation etc.
  2. There are few competitors.
  3. Your brand has the strengths to dominate it.
  4. It is profitable. With numerically few customers and competitors, volumes are relatively small and high margins and premium pricing should apply.

So, how can a profitable niche turn into a rut?

  1. Disruptive change. The narrowness of a niche can make it very susceptible to changes in technology, needs, culture, legislation, economic instability or fashion. We have recently seen how fast-moving digital technology has destroyed previously secure and profitable niches.
  2. Growing competition. If a niche, by definition, is profitable you can be assured competition will grow. Nobody can command a niche by right; you have got to keenly watch competitors and maintain competitive advantage for the brand. If the competition builds to a substantial level, you may suddenly find it is no longer a niche.
  3. Declining brand strengths. It is very easy to sit in a comfortable niche and not to manage your brand strengths. Customers become bored and may look to other solutions and other niches. The world moves on and new brands may establish niches all of their own.
  4. Poor brand communications. Again, complacency can kill. Niche domination can lead to contentment, smugness and arrogance. The brand still needs to engage and communicate with its audience. The powerful relationship which exists in a niche should not be squandered – and remember, communication is a two-way street. Listening to your audience can be your strongest safeguard against the potential pitfalls of niche operation.

True niche marketing is an exciting and attractive approach, though sadly, we often hear businesses using it as an excuse for being backward-looking and insular. Exploit the opportunities in your niche – maximise your brand advantage and constantly be looking at the wider world beyond it. That is where the first signs of threats and opportunities will appear. Be in control of your niche otherwise you may suddenly turn around and find that it has turned into a rut. And what is the difference between a rut and a grave? Only the depth.

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