Business Starting Challenges and Niche Products Identifying

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Identify at least three challenges when setting up a business. Explain why they are challenges

Starting businesses in the current markets environments have been proven hectic by entrepreneurs. Starting a small or large business pose certain challenges that accrue until the business start making profits (Kelly & McGowen, 2010). Every business follows a certain business life cycle. Starting or the birth phase/stage challenges are much intense that most entrepreneurs choose to avoid them by simply closing down enterprises. Some of the challenges business people face includes the following;

Raising capital

Capital is the single most important resource by which ideas are implemented into a viable enterprise. Since small businesses depend largely on the owner’s savings implementing such ideas becomes problematic. Small businesses are limited to external fund sources. Most entrepreneurs start a business at scratch making them kicks start at a very slow pace.

Time management

Entrepreneurs usually face challenges about the time required in business. All decisions, tasks, and duties in all facets of the business are the responsibility of business people. Essentially, entrepreneurs focus on being their boss, achieve financial individuality, and enjoy innovative freedom through utilizing their skills and knowledge. All these are time demanding making management of time a critical issue in starting a new venture.

Hiring experienced staffs

Most entrepreneurs start businesses when they don’t have adequate technical and administrative skills. In this case, recruiting and hiring educated and skilled personnel is vital for business success. Since entrepreneurs start businesses at scratch, businesses do not have adequate funds to cover all normal operating expenses and salaries. Hiring outstanding employees in skills level and experience at low salaries becomes a problem since the skilled workforce look for green pastures. Essentially, entrepreneurs are forced to work hard for their idea implementation and success. Not until the enterprise grows big and creates adequate and stable capital skilled and experienced workers, hiring is impossible or it’s a challenge.

Define what a “niche” product is. Give at least three examples of niche products

Small and medium enterprises adopt either mass marketing or niche marketing as strategies to penetrate markets (Anon. 2008). Each approach has its advantages and disadvantages and it up to the business owners and managers to evaluate the viable strategy to market their products. Often, mass marketing is not a viable option for the small business thus niche marketing becomes exclusive for them. Anon. 2008, views a niche product as the product that is designed specifically to meet the needs and wants of a specific customer or end-user. In this case, the marketer has a full understanding of the desires and wants of the customer.

This understanding can be gained through market research or personal experience. Examples of niche products include categories of demographic and psychological products niche. Products are based on demographic features such as children’s clothes. Products that serve a particular class of customers such as luxurious vehicles from Lexus are examples of niche products. Similarly, solar electricity gadgets and computer play games and accessories can also be categorized as niche products.

Explain why a niche company might have an advantage in the market. Would the price necessarily be an advantage? Explain why or why not

Niche in marketing refers to an exclusive environment possessed by business enterprises (Anon, 2008). Niche enables an organization to focus and utilize its resources in a particular target market place or environment. Customers’ needs and wants are satisfied by marketers by approaching the market with a niche product. Therefore, as noted by Anon, 2008, marketers need to provide products that have distinguished unique products in the target market. The effects of the niche product need by first testing the market before developing such unique products. Niche marketing/product presents advantages that outweigh mass marketing advantages. Some of these advantages are;

Niche products face less competition compared to mass marketing products.
Business is in a position to maximize profits by devoting its resources specifically to unique products and specific customers. This promotes efficiency and effectiveness in marketing rather than focusing on the entire market.
Since niche products address the needs and desires of a relatively small market segment, it is significant for businesses to enhance communication and differentiate their product effectively.

Niche products also possess a differentiation advantage where the company can choose one marketing mix variable such as price and maximize it (Anselmo, 2010). A price is a powerful tool that in most cases helps in positioning the product in the end user’s perception. Thus, prices are an advantage in niche marketing and products. In this case, prices shape the customer’s perception, and the position products brand accordingly.

Identify and explain three reasons why customers would pay more for exclusivity

An exclusivity is a marketing approach where organizations position their products as unique with certain characteristics that essentially attract customers exclusively (Kelly & McGowen, 2010). The concept of exclusivity in marketing takes a wide spectrum as a tool to create organization perception on customers’ minds that not all customers can become members. In this case, marketers will find approaches to make an exclusive organization that will influence customers to join like members.

Significantly, customers will always pay more for such exclusivity. A product in an aura of exclusivity ensures that the offered benefits surpass or meet the potential or present customers’ expectations or desires (Kelly & McGowen, 2010). Marketers differentiate their products in such a way that the benefit derived from the product meets customers’ demands and wants and the benefits are equivalent to the value of their money.

Customers perceive themselves as members of a club. Exclusivity enables organizations to seem like a membership club where customers feel distinguished and served as per threquestsuest and demanAlsotion, customers feel as part and parcel of organization and to contribute in designing of the marketing mix. The exclusivity designed around a product cream tes unique demand makes make products look superior to the competitors’ brand. In this case, customers will go for goods and services that are superior ad those that meet expectations or desires.

Explain how a niche player “chips away” at a larger competitor’s base. Give three examples of retailers who have done this

Organizations in the present market arena portray strategic approaches to outperform their competitors. Small and medium organizations have engaged in niche playing criteria to surpass the competitors’ performance in the market (Anselmo, 2010). Fundamentally, this organization uses exclusivity aura and niche marketing to take a strategic position over competitors. The process starts by taking a unique distribution channel, provide unique goods or services at a premium, and specialize on a specific product base. Examples of companies that adopted niche playing over competitors are Starbucks, Amazon.com Corporation, and Wal-Mart.

Starbucks managed to provide European style coffee which attracted customers by exclusivity than the standard coffee provided by competitors. Wal-Mart and Amazon.com are other retail corporations that utilized this by developing new unique distribution channels and stores.

References

Anon. (2008). Mass versus Niche Marketing. Web.

Anselmo, D. (2010). Marketing Demystified. New York City: McGraw-Hill Professional.

Kelly, M., & McGowen, J. (2010). Business (2nd Ed.). Mason, OH: South-Western Cengage Learning.

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