Stay in Your Niche to Avoid the Ditch

Big is not as beautiful as it used to be. 

One significant trend of the '90s will be the continuing emergence of the small, highly niched company whose business is to provide goods or services to a highly targeted audience. 

For much of the 1980s, the dominant thinking was, "Big is better." We've learned that big not only isn't always better, sometimes it's worse. Bigness is increasingly more of a problem than a solution. The larger the company, the greater the tendency to move in illogical directions, to want to expand for no better reason than to grow. Many companies that haven't stuck to their knitting have paid heavy prices to learn they should have. 

Ten years ago established companies were acquiring businesses by the bucketful. Many made acquisitions with little regard for what they knew about the industry they were entering. The worm has turned. Today, many of those acquisitions have become disappointments and smaller companies that know the industry are buying them back. 

We have learned we can't be all things to all people. We've also learned we can achieve excellent results by staying in a business segment we understand. 

The downsizing of American enterprise is an indicator of an increasingly entrepreneurial society. The small, highly niched and specialized business–with a tailored product serving a well-defined audience within a specific geographic area–is an important part of our future. 

Creating a niche is like cutting a pie into 10 pieces instead of six. Breaking markets down into segments not previously targeted creates niches. It's a highly entrepreneurial process requiring early recognition of an opportunity. 

There are other observable patterns that bode well for niche marketers. 

Media Segmentation 

The success of a niched business is highly dependent on its ability to offer products or services pertaining to a specific, identified audience. Accomplishing this requires reaching the intended, identified audience with a highly tailored and informational message. 

Fortunately for the niched marketer, media is also becoming increasingly specialized. In the years ahead, there will be more opportunities to efficiently advertise and promote niched products to targeted audiences. The segmentation of America's media is, in itself, a confirmation of the increasing viability of a more thoroughly targeted marketplace. The total size of a medium's audience is becoming less meaningful, while the type of audience reached is becoming more meaningful. 

The media wars of the future will be fought on the demographic and psychographic battleground. Mass media, such as daily newspapers and network television, will find themselves more and more out of step as viewers and advertisers make decisions more tightly aligned to their specific needs. Waste is out, targeted audiences are in. 

Radio is becoming an increasingly important promotional vehicle. It's highly adaptable to audience segmentation and can readily change its target audience and its geographical coverage. Radio will increasingly anchor the promotional activities of businesses with a demographically targeted product or service. 

Market Regionalization 

Our economy's increasing segmentation will have other important impacts. For example, as target markets become narrower, there will be an increased need to reach further out geographically to find a market of adequate size. That introduces us to increased regionalization–another important futuristic influence. A narrower band of customers coming from a broader geographical area can be compared to the difference between a satellite sending a radio signal to a receiving dish on earth versus the broad distribution pattern of a standard AM or FM radio signal. They are both radio signals, but one has a more distant and specific target. 

The news is good for business developers able to recognize a niched market opportunity. Niching is an important futuristic trend and offers terrific potential for alert entrepreneurial thinkers.