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Posts Tagged ‘competitive advantage’

Here’s how to niche

Many business owners are reluctant to select a niche to focus on, fearing that it will reduce their potential client base, and result in less sales.  Last week, while on holiday, I witnessed first-hand a company using a very specific niche to their advantage, and really making it work.  So how did they do it?

We decided to take the children to Auckland for a night to use a credit that was about to expire on our travel club membership.  We were looking for a good deal for a family and the best one we could find was at Jet Park Airport Hotel in Mangere.  The main reason we chose it was that it offered free parking, which made it more cost-effective for us than some others, plus we could get a free shuttle to and from the airport – a novelty for the children.

Jet Park Hotel have chosen the domestic air traveler as their niche market.  Everything in the hotel and their packages is set up for this.  Everyone staying there is entitled to a shuttle both to and from the airport and if you stay one night or more, you can park on their property for up to 14 days!  The hotel is not situated as close to the airport as many others, but is in a mixed area of industrial and residential properties.  It is not a particularly salubrious area, but Jet Park have developed a competitive advantage that allows their strategy to work – they have used the lower cost of land at their location to allow the free parking benefit for all their customers.  The hotel is set back off the road down a long driveway, and alongside it runs empty fields they have turned into carparking.

Given the cost of parking your vehicle anywhere else close to the airport, the free parking is a massive advantage to domestic travelers with vehicles and also for those attending conferences and training in the rooms they have available for businesses.  Niching in this way allows the hotel to target everything they do.  They market directly to national air travelers.  The reception staff clarify at check-in when you need a wake-up call for your flight, and when you need to book the shuttle.  There’s some other nice touches too, like a small indoor and outdoor play area for younger children, a pool to cool off in over summer, a small library if you want to borrow a book, and complimentary fruit and mints throughout the hotel.

The interesting thing is that we chose the hotel even though we were not air travelers.  The free parking made it a good deal for us, and we used the shuttle as a bonus activity with our children.  We went to the airport viewing lounge and watched some international flights arrive and depart, and had a snack at the food halls.  I’m sure we are not the only ones outside their targeted niche that choose that hotel because the benefits are valued by others, as well as the niche.

Of course the Jet Park won’t suit everyone.  Some travelers will prefer to be on the airport campus, and others will prefer to stay in the central city or other parts of the city.  But no hotel will suit everyone.  By selecting a niche and serving that niche very well, the Jet Park Hotel has made its marketing activities easier to select and target, as well as how it trains its staff, sets up the hotel, manages add-ons etc.  While we were there the hotel appeared to be very busy, and the award-winning restaurant seemed well patronized.  The shuttle was non-stop collecting and dropping passengers to and from the airport.

So how can you apply this idea of serving a niche to your own business?  Can you break down your customers or target market and serve one or two niches really well?  Do you do that already?  Are you ‘dominating’ that niche? How does this streamline your business activities like marketing, customer service, product and service development and staff training?  How do the services and add-ons you offer for your niche benefit others and grow your business?

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When does competition matter?

Porter has a fairly strong focus on competitor analysis for strategy development. Some other writers and experts claim that competitors don’t matter – just get on with pleasing your customers. So do competitors matter and if so, when?

I’ve tended to hold the view that you should always keep a watching brief on your competitors, but not get obsessed. No need to stalk them, conduct industrial espionage or get similarly carried away in most situations. These days with social media and websites its pretty easy to know what they’re up to most of the time anyway. However I’ve recently had two experiences that have confirmed pretty strongly that watching and ‘outwitting’ your competitors, even when they are also ‘friends’ can be fairly important for survival.

The first was when I heard the owner of a well-known supermarket in Hamilton talking about the arrival of several competitors into his patch. One was a food specialty store run by a pretty savvy Auckland operator. However, the specialty store did not last long, despite being very successful in other cities. As soon as the supermarket owner heard of the plans to move into his patch, he had his staff check out the specialty stores products and pricing in a nearby city. He made sure he was offering the key products and brands that they stocked. By the time they opened, customers had already seen the ‘new’ products and mostly at better prices. I’m not suggesting this is the only reason the specialty store didn’t last as I don’t know, however, it does suggest that close competitor analysis in this case, may well have paid off. A savvy business owner or manager can certainly make the competitors road tougher than they had hoped.

The second situation is a client of mine who already operates with some key competitors, but each have their niche and operate quite nicely in the same space. However, due to some structural changes and financial commitments of one of the competitors, they have now moved into direct competition in terms of their offering. When I alerted my client to the development, they had not responded or thought about what was happening. Since then we have observed the competitor applying similar marketing tactics (not as successfully as yet!) and getting in front of our customer base. However, because we have analysed the probable reasons for the competitor move, the likelihood of it continuing, and their probable weaknesses and strengths, we have been to respond and plan to survive what we believe will be a short-term problem (we’re pretty keen to ensure it’s short-term!). However, had my client not developed a plan to manage their response to the competitor move, it could have had a major impact on their customer base and bottom line.

So do competitor’s matter? – well yes. When do they matter? – I guess anytime they have their eye on your niche, your customers or your competitive advantage!

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