Concept of Niche Marketing

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Table of Contents

Introduction
Case study
Diversification as a Strategy in the Business
Marketing Strategies versus Production Techniques
Conclusion
References

Introduction

Niche in French directly translates to nest. Niche marketing thus has the connotation of being cagey meaning it’s focus is on a minute portion of the larger product and service market whose needs are not met in a satisfactory manner (Groucutt, 2004), (Armstrong, et al., 2007).

Most businesses, that are market leaders nowadays, began with an interest in serving a particular small composition of people and developed into bigger outlets with improvements in their products (Moore and Paree, 2009).

Niche marketing, however, does not mostly apply to big companies but rather medium to small enterprises that produce specialty products not available in the mainstream markets (Dalgic, 2006). The market size can be geographically chosen, targeting an age group or ethnic community or it can also be a variation of a common product not produced by any other firms.

There is no difference between identifying potential business ventures with identifying niche markets. In fact, most people who have successfully ventured into the niche market business do so accidentally. The guaranteed way to success lies in persistence and recognition of vacuums in product and service markets.

For anyone starting a business, there are several factors they have to consider. First, there is a need to identify the particular niche market you intend to serve and its characteristics. Secondly, one should ensure that the business they are venturing into rhymes with the specific professional goals they harbour.

Another factor that should be considered is resources at hand and those that lack and need acquiring. Lastly, one should develop a business plan that details extensively the way they intend to start, run and market the business.

A description of the business, an analysis of the niche market, a mission statement, strategies and objectives of the business, plan of marketing, description of operations, expected sale figures, risk analysis, a financial plan and the expected source of assistance are all details that should be considered and detailed in a business plan.

Case study

In the United States, there are immense opportunities that are associated with agriculture guaranteed by the diversity that the population possesses, in terms of the different cultures, hence different staple diets. For example, food that is the staple diet for African-Americans in Harlem is not the same as that consumed in China town, both of these areas being in New York City.

Quality, adaptability and novelty are the key factors that determine success in the agricultural industry. As niche marketing is mostly done by small to medium enterprises for a specific market, we will discuss Rockridge farm in Seattle, US (DePhelps et al., 2005).

The farm is about 41acres in size and specializes in the growth of Asian pears, Japanese and Chinese cucumbers, hothouse tomatoes and bamboo. These four are their specialty crops. However they also grow wasabi, ginseng, lettuces, Asian greens, shiso and a range of over fifty other niche market products that target the Asian community in the region.

Their products are marketed using a wide range of methods and they have a solid business plan that they follow strictly. They have also ventured into many different kinds of farm products and this strategy is aimed at spreading risks.

Rockridge farm is structured as a sole proprietorship enterprise and is owned by Wade Benett. He has created a model that allows him to market his products using a wide range of avenues. This, he says is aimed at reducing the over reliance on a single market, which may be counterproductive.

His products are sold through farmers’ markets, farm stands, grocery stores and restaurants. He began by selling their products in the Seattle farmers’ markets as an experiment and has since diversified in a period of the last 20 years. Having built a good reputation from his top quality products, he has the luxury of choosing which market to serve and he prefers the markets that sell food products only; unlike those that sell both food products and crafts.

This, he claims, is because he likes his customers to be solely focused on his products so that they are in good quality when they are purchased by the eventual consumers. He adds that he likes to reduce damage resulting from over handling of his products and prefers markets that are well regulated with clearly laid boundaries for engagement and with fair competition.

There are two permanently employed staff members at his farm that are charged with marketing. Together with his wife, wade monitors profitability of his operations while gauging customer satisfaction and the competition. Uniqueness, he claims has been the reason he remains competitive coupled by the fact that he deals with products that are not in oversupply.

Wade has also been marketing his products to specific restaurants and most of the other restaurants access his products at the farmers’ markets. There are also those who request that specific products be grown for them, which he sells at a retail price.

The products are identified by the farm name and hence a reputation has been built out of this. Most repeat customers in big restaurants are attracted to the food because they know it is grown locally, with care and in the best conditions.

Selling to restaurants is more stringent with more boundaries unlike marketing to farmers’ markets. There are more expected in terms of delivery times and the quality and quantity required. However, with this increase in expectations come better responses about product quality.

With restaurants, wade argues that he could not afford to fail to deliver in case there is crop failure. He thus asserts that in order to avoid this, he is forced to over plant which curtails production of other products hence a reduction in expected sales figures.

Wade markets his products through community supported agriculture. Members of his community usually pay a subscription fee and are given priority whenever they require a product. He has however capped this subscription to only 21 people as he points out the fact that more subscriptions could lead to delivery failure whenever a product is in short supply and hence loss of customers and a negative reputation.

Customers with these subscriptions can pick their products either on-farm or in the farmers’ market. Of all the families he has accorded subscriptions, 90 percent have one spouse being of Asian descent and are in a high income bracket.

The program is labour intensive as products have to be packaged specifically for these clients. He also points to the fact that this program is not as profitable as his other ventures but says that since the subscribers pay for the products during the month of April, he is capable of accurately crafting a budget during this otherwise slow period.

Another avenue for marketing the products is with the use of farm stands. This entails displaying his products on his neighbours’ farm stands and it gives him the exposure needed for his products and also adds to his diversification policy.

He says that due to insurance liabilities and expense in logistics, he stopped operating his own stand and preferred other people’s as it was ultimately cheaper and boosted his products sales. Displaying his products, which are labelled with his farm name, on other farms’ stands helped market his products and build a reputation.

He has, however, decreased the number of stands he sells his products from; to four, as he says that operating from many stands floods the market and this could drive prices down. There is also the intrinsic value of selling through other people as they benefit financially from the sales. This is part of community building that Wade takes pride in.

Grocery stores also market Wade’s products and nearly 50 percent of his total production is sold through this avenue. He sells through “Mom and Pop” stores that are primarily frequented by Asians as well as in Seattle’s international district. It was illegal, several years back, to import fresh bamboo shoots and hence a large untapped market for them was available, as they comprise the Asian staple diet. It is now legal to import bamboo shoots but Wade says that this has not stunted his sales in the product as he had already carved a reputation for himself.

As a last result, Wade frequently sells to distributors although he claims it does not please him as he cannot control what wholesalers do to his products. The figure below shows Gross Income from Sales, 2003 iversification as a Strategy in the Business.

Diversification as a Strategy in the Business

Rockridge farm markets its products through a number of different channels. The major factor that makes this diversification model successful is cost cutting. The farm saves on transportation costs and also on delivery. It is possible to avail the products to different outlets at the same time.

They also use the same packaging to deliver to the different markets. Where uncertainties occur in the market causing prices to go down, the firm is somewhat cushioned against excessive losses in comparison to other businesses that take all their products to wholesalers.

Wade avoids advertising as he says it is unnecessary because his niche market is not that large (Bose, 2010). He however gets published at least once every month on the local newspaper, magazine articles and also through letters to the editor.

The greatest tool for his success in promoting his product comes from his many years of consistently availing to customers top quality products. He, on occasion, requests feedback from his customers and interrogates them on how they came to learn about the farm. Most people get to know about his farm since his packaging is unique and it bears the brand name which has acquired a good reputation. Grocery stores focus on products that have a long shelf life and look good on the outside which according to Wade are tasteless.

He however recognizes that those products generate more money for store owners (Economist, 2006). The people that care about taste are particularly home owners and restaurants that are judged according to the quality of the meal. These are the people that Rockrigde is interested in and strives to keep loyal.

Marketing Strategies versus Production Techniques

Rockridge emphasizes good customer relations which are reflected right from the production stage. There is reduced usage of chemicals on the farm and use of sustainable techniques that are fundamental to the longevity of the farming practice.

Other practices aimed at building confidence around their brands include not raising animals that may increase the risk of pathogen contamination and encouraging customers to visit their farm frequently in order to understand the mode of operations first hand. Wade further explains that he has never held any Food Alliance certificates but rather depends on the reputation he has built by being in the market for product promotion.

Growth of the various exotic and lower return crops is both labour intensive and engages extensive research on the best practices. There are many factors considered that make the difference between good and bad products. In order to consistently produce the best products, Wade has adopted the best practices that include possession of agricultural know how which focuses on the optimum conditions needed by every crop grown, at different stages of growth and during the diverse seasons in a year.

Since 1992, the farm has been making decent profits and not once did it incur a loss. The gross sales from all markets have been steadily growing each year. The plan that Wade has is to increase his markets by one or two each year so that he consistently gets returns on his investments.

He attributes his current state to the reception he has received by diversifying and by focusing on the customer. He has also endeavoured into other Asian cultural practices that go beyond diet in a bid to strengthening his relations with the community since they are his primary target.

Wade continues to experiment with different crops in order to remain profitable. He has, in the same light, dropped some of the products he used to produce when their reception diminished. The factor that determines whether he farms a specific type of crop or not is whether the customer needs it and is willing to pay a premium for it. Another factor he considers is whether the product elicits interest from him or not. He says that he would not like to farm a crop he does not care for.

In order to reduce wastage of products that are over flooded in the market, Wade has invested in equipment that juices certain fruits e.g. pears that are popular but also common. This is another source of revenue that he has ventured into.

The farm acquired a license, 1n 2004, meant for the production of hard cider and vinegars. This made it possible for the conversion of lower value plants into high value end products. When prices for pears rapidly decreased in 2003, he juiced them adding raspberries into the juice and sold it at a premium and this proved to be very successful.

He points out the fact that, for any business to grow and remain profitable, it must consistently adapt its products to the niche market (Joshi, 2005). This has been very essential at Rockridge as it has helped the business stay afloat even in the most adverse conditions.

Impeccable record keeping, constant involvement and consultation with staff members and experts have assisted Wade’s business immensely. Additionally, his close contact and involvement in the business on a daily basis has also played a major part in its success.

He forecasts his sales trends for even up to two years while training a keen eye on other market factors. He can know if and when there is going to be a flood in the market for a particular product and thus predicts the tanking of prices. This information he acquires by making sure he knows what his competitors (Ries and Trout, 2006) have planted and when those crops will be in the market.

Conclusion

For Wade, his business is his lifestyle which he then translates to a source of revenue. He has passion for the work he is engaged in and this, he says, is what makes the difference between success and failure. He has segmented his market by Geography as he serves a small part of the larger Seattle market. His market has also been selected using ethnicity as a factor reflected by the fact that his primary clients are of Asian descent.

This has made him focused solely on providing products that are reflective of the staple diet of the Asian people. He has employed a number of techniques that enable him to consistently produce only those products that are not flooded in the market and elicit interest from this segment.

In our discussion earlier, we identified niche marketing to be focused on a vacuum in the market where the mainstream marketers do not have products to satisfy that particular market. Rockridge farm can thus be considered to have capitalized on this opportunity and has consistently continued to produce only goods targeting this vacuum.

They have, therefore, carved a niche market for themselves and are excelling at satisfying it (Chaston, 1999). Consistency over the years and the possession of a solid business plan, have been the major contributors to the success story at Rockridge. Employee engagement and use of other labour intensive methods have ensured that the crops harvested in the farm are of the best quality.

To have the perfect market mix is the utmost important rule of marketing (Belohlavek, 2008) and Wade seems to have gotten his mix right. The place he chose to market his products is both fertile and large enough to sustain his business. It is also close to the target market hence little costs are incurred in shipping.

Wade has done a good job in selecting his target market, ensuring that he has repeat customers and has a secured future. He has, consequently engaged in a number of promotion mechanism suitable for his business without incurring extra expenses. Lastly, for any business to be successful, one must get a premium for his products.

Wade only farms crops he believes will fetch the best price in the market. He, therefore, endeavours into other methods like juicing and production of vinegar in order to raise the value of those products that are flooded in the market. There are many success stories in the world today; arising from the successful identification of the niche market and Rockridge seems to be doing a great job towards success.

References

Armstrong, G. M. et al. (2007). Marketing an introduction. New Jersey: Pearson/Prentice Hall

Belohlavek, P. (2008). Unicist Marketing Mix.nd. Blue Eagle Group. ISBN 978-987-651-011-0

Bose, C. (2010).Modern Marketing – Principles & Practice. New Delhi: PHI learning private limited

Chaston, I. (1999). New marketing strategies. London: Sage Publications

Dalgic, T. (2006). Handbook of niche marketing: principles and practice. New York: Haworth Press

DePhelps, C. et al. (2005). Profitable Niche Marketing on Rockridge Farm. Idaho: Rural Roots and University of Idaho Research Team

Economist, (2006, November 11). Swarming the shelves: How shops can exploit people’s herd mentality to increase sales. The Economist, p. 90.

Groucutt, J. et al. (2004). Marketing: essential principles, new realities. London: Kogan Page Limited

Joshi, R. M. (2005). International Marketing. New Delhi: Oxford University Press ISBN 0195671236

Moore, K. and Paree, N. (2009).Marketing: the basics (2^nd ed.). New York: Routledge.

Ries, A and Trout, J. (2006). Marketing warfare. New York: McGraw-Hill Companies

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