Your business could produce a better product than your competitors supply, have better customer service than your competitors demonstrate and even provide both at a lower cost, but still fail because you don’t understand the best route to market for your business. Knowing your target market is one thing, but accessing them properly is another.
Take Coca-Cola or Pepsi and the soft drinks market as an example. How many new brands do you see at the pumps in McDonalds, KFC and any other national fast food chain? Even the rest of the soft drinks are owned by Coca-Cola and what do you think happens to small time players (which is every other company when you compared to these giants) when they approach a large chain?
The chain will immediately question whether you can compete on capacity, reliability and cost and it’s fair to say that PepsiCo (list of companies owned) and Coca-Cola will beat most competitors hands down. In February this year, the Office of Fair Trading or more specifically, the competition commission, decided to postpone a decision to allow or block the merger or Britvic and AG Barr (list of products) because it would remove the ability for other manufacturers to compete with them in the UK. Even with the merger and Britvic’s close ties with PepsiCo, the Britvic-Barr partnership would never be able to rival Coca-Cola for a share of the market. So what chance does a smaller player have?
Winning Strategy In Drinks Market
You just need to choose your battles to bring a new product through and make it successful. Take Innocent drinks as an example. The three directors chose a target market without any big players and played to their own strengths. It could be called a niche market because they make smoothies and instead of targeting the fast food chains, which is where few people concerned about their health eat, they went after fit people in a different market.
After funding the venture with just £500 worth of fruit, they managed to secure investment and fourteen years on, Innocent are 90% owned by Coca-Cola and have their products in one or two fast food chains. Needless to say, all three founding members are incredibly rich and they managed it by following Sun Tzu’s ‘Art of War’ even if they didn’t realise it. The book is a strategy masterclass that has many quotes, but the one about ‘fighting your enemy where they are not’ is perfect for this example. Innocent saw the gap and targeted it.
Is this Method Transferable?
You can use this method to take a share of any target market; you just need to apply it to your business. Innocent produced a different product, but if your business has many competitors for the same market, a simple SWOT analysis will often reveal areas you can exploit or focus you your efforts on for a period until you win market share.
A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis could reveal areas of your opponents marketing methods that provide you with opportunities. If your competitors are weak on Social Media marketing, target customers on Facebook, LinkedIn, Google+ and Twitter. If your Opponent has a massive Facebook presence, think about targeting Google+ or LinkedIn.
If they are big on all SM platforms, market where they are not big. If you build a presence that people recognise and associate with a certain type of media or location then your business will capture market share.
Try a Different Route to Market
In every industry, there are micro-niches that vary in size because industries vary in size. Take the mobile phone market. The big five, T-Mobile, Vodafone, Orange, Three and O2. Orange and T-Mobile have merged to create EE and that makes the large companies even more difficult to displace. Even Richard Branson has found it difficult to establish Virgin as a major player when compared to the names mentioned.
GiffGaff have found a niche where the people who distribute their free sim-cards are able to benefit from commissions for every sim card activated by a new user. Although GiffGaff (spelled giffgaff) use O2’s network, they are able to offer cheap call and data rates because their product is user-marketed. Telefonica, the Spanish telecoms giant owns giffgaff, but rather than invest billions in a gamble to become established, they have grown through the back door by marketing themselves as a franchise for bedroom entrepreneurs.
WorldSim is another player that is marketing to a very niche part of the telecoms market by focussing on customers who use their phone abroad. Worldsim.com sells prepaid sim cards that allow you to reduce your call charges by as much as 85% when overseas. They target holiday-makers and business travellers and they are gaining ground because they recognised there was a part of the market that could be exploited. Essentially, a weakness in the marketing plan of other telecoms companies, but an opportunity for their own.
Applying your Time
As with any marketing initiative, you need to fully assess what your return on investment is likely to be and only then can you decide whether there is a real opportunity to grab market share. You’re your niche, start small, but aim big and never give up.
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