Niche is not a word most marketers in large companies want to hear, given its association with smaller audiences and limited potential. However, success with niche products is possible and it requires careful handling from idea to in-market launch.
With thousands of innovative products going through our research frameworks every year, Ipsos is in a unique position to follow products from their inception to in-market success or failure. We have witnessed products like the iPad and Fitbit evolve from niche to mass successes at varying speed. From this vantage point, we have identified the six keys to success for niche product.
1. Identify a Niche Product Early
Early detection and acceptance of niche ideas is the first and most important step in a successful launch path. More often than we’d like, we see companies treating their niche products like mass products and incurring losses. The pressure to produce a mass success forces marketers to maximize the reach of the idea and in the process dilutes the effectiveness of the proposition for its core target. Ideas, like children, have a unique personality and require nurturing and enabling.
Our Edison Award-winning Archetypes framework (think of it as a segmentation of all the different types of innovation we see) helps identify the personality of the idea early in the process, thus giving marketers an opportunity to commit to the right strategy for their idea at a very early stage in its development. Most companies don’t recognize the untapped opportunity offered by various types of ideas. Niche is the single most frequently occurring archetype in our experience. Forty percent of the ideas we test fall into this category and may not be pursued by large companies. “Me-too” ideas are another underused opportunity (with 65% success rates) but these only appear 5% of times. It is the early recognition of the personality of the product and the right strategy that led to the roaring success of the Fitbit, for example.
2. Redefine Success Benchmarks
Once you identify a niche product, you can give it a fair shot at success by redefining the benchmark for success. Success for a true niche product cannot be gauged on sales/penetration potential among a general population like the mass products in a company’s portfolio (though it does still need to have positive financial potential, at least on a smaller scale). By definition, a niche is a small underserved segment. Success, initially anyway, should be the acceptance of the product among a narrow definition of consumers that display a high intensity of liking for the product and need or want the product.
3. Zero in on the Right Audience
Successful niche products have an audience that is clearly defined and reachable. Starting with identification of pain points usually presents a better chance of uncovering the right target. Once the pain point is identified, the question becomes who are the acute sufferers. Demographics are a good starting point but they are rarely sufficient for a strong targeting plan. As consumers (and millennials to a larger extent) rely on online channels to learn about new products, target definitions need to go beyond the ones used by media agencies for mass communication. Richer information on attitudes, behaviors and channels is essential to nurture niche to mass. Each of these elements informs a different aspect of the communication strategy.
As a clear image of the target emerges, it is also important to ensure that there are identifiable marketing channels corresponding with target characteristics that allow you to communicate with the audience. Because while the ultimate market size of a niche product may be smaller, the marketing expenditure also has to be correspondingly reduced.
Ultimately, in order to justify the investment, the target has to present an opportunity large enough for the business. While specificity is essential in target definition, there is a delicate balance between being specific and the size of the future opportunity. A few added layers of specificity can tip the balance to make the size of business opportunity less desirable.
As an example, we have closely followed the introduction and development of activity monitors (think passive fitness trackers). One might imagine the target for this category as a whole would be fitness enthusiasts, people who are active, watch sports and are generally more involved in outdoor activity. However, a closer look at the profiling data from our research suggests that the ideal target is in fact young moms. It is a niche product with a perpetual audience, and one that is easily reachable.
This target is in fact being pursued by Fitbit through their Everyday fitness products line.
Nike Fuel Band, on the other hand, pursued a more sports-focused target and the product failed to meet the high expectations of the target, demonstrating the importance of product / target fit.
4. Revisit the Value Proposition
Having a strong value proposition becomes imperative when it is targeted towards a specific (smaller) segment with less room for error. A strong value proposition is grounded in needs and desires shared by the segment. Once the target is identified, revisit the value proposition to ensure it speaks to your target. The revised value proposition then informs which benefits you highlight.
For example, in going after the sports enthusiasts, Nike was not catering to a need or a friction. Active people in general know their activity levels, and while they are concerned about their fitness, their specific need for diagnostics can be better met with more sophisticated equipment than the Nike Fuel band – just counting steps is not enough. Jawbone and Fitbit on the other hand uncovered the need for motivating people that lead a sedentary urban lifestyle. The need in this case is not information (how many steps did I take?) but rather motivation (what will get me to take more steps?).
5. Find a Singular Message
A simple and single-minded articulation of benefits (aligned with identified needs/desires) ensures that the target is able to connect with the product.
Among the various activity monitors we have tested, UP by Jawbone stood out for its clear and single minded communication. Others offered a multitude of features – the ability to track steps, track calories, measure intensity of activity, distance traveled, stairs climbed, sleep quality and duration, silent alarm, water resistant, ambient light sensors and more. But consumers clearly liked one simple benefit from UP – a vibration to remind you to move when you’ve been inactive too long. The benefit clearly links to the identified consumer need of not remembering to move enough and responds to it in a simple and effective manner. The communication isn’t cluttered with too many features. This also lends the product an opportunity to benefit from strong word of mouth awareness.
6. Plan for Long Term
As the lines between products continue to blur, it is harder and much more important to remain relevant. Weatherproofing your product requires attention to not only the competitive forces today but also the harder to predict storms from across categories.
Although mobile phones have introduced activity monitoring features, wearable activity monitors continue to sell largely because the feature in mobile phones is not convenient to use. Smartwatches still lag behind due to battery life concerns and a high price tag. As technology improves, these present an imminent threat to the activity monitor category. Nike Fuel Band, despite having an early mover advantage, withered under competitive pressure and was discontinued.
In order for a brand to succeed, it is important not just to have one successful idea, but to have successors ready for market before the competition can catch up.