Someone once told me there are 13,000 wood carvers in Gianyar. Or maybe it was 32,000. Naturally, I believed her because that’s what we do when someone tells us something, right?
Benefits of Being Niche Player:
Whatever the number, there are an awful lot of them and some of them really are awful, with the shoddy output of long-legged giraffes and cats that even a coat of paint can’t really improve. They get a few thousand rupiah for each of them. But some of the carvers produce work that is truly exquisite; bold, imaginative works of art that optimize the grain and flow of the original timber.
Some of these pieces rightly command tens of millions of rupiah. Then there are people who make a living from the carvers; I once lived next to a comfortably-rich family that specialized in taking middle-ground, ordinary-looking pieces. I was embellishing them with paint and cloth and baubles to command prices in multiples of their original cost. And of course there are the middle women who take the raw giraffe at a few thousand rupiah, add a coat of paint and sell it at the local market or the airport for 10 times that.
All these business people have customers who are their target market, and they are filling a particular customer need. If wood carving is a niche (there are also stone masons and bone carvers supplying the same target market) then the latter two examples are niches within a niche.
Importance of Niche Marketing
You read a lot in the business press about the importance of niche marketing, especially if you are a small business. But I think you need to also keep in context the size of your market. It’s pretty hard to be a successful niche retailer of ballet shoes in Bali, no matter how great your product and how passionate you are about it because your target market is very small. Whether it’s a country town in the Western world or a village in Ubud, the corner store or warung is a general provider of people’s needs still. Its local niche is that it isn’t usually the fuel supplier or the doctor. However, demographics are changing this traditional store as well. It’s less and less likely now to find a young woman here in Ubud who has never been to Denpasar for a wider choice and a range of specialist shops.
So a key element of defining your niche is being savvy about the critical mass of buyers you need to make it viable. This is the number of buyers you need to ensure your product takes off.
As a customer base grows and as incomes rise, opportunities for niche markets also grow, and some of them are bizarre.
Note this recent conversation:
- “My local branch of the Ubud Women’s Construction Corps is making lots of money, they are always so busy!” “That’s good.”
- “They are helping convert rice fields into villas”. “That’s bad.”
- “The Corps is now equipped with a fleet of wheel-barrows in lieu of buckets on heads, to increase their productivity.” “That’s good (especially for the niche seller of wheel-barrows).”
- “They are showing signs of increasing lower back pain.” “That’s bad.”
- “This will create a new niche opportunity for a specialist in lower back pain.” “That’s good?”
What are the benefits of being a niche player?
- You can focus on one set of customer experiences that you can excel at.
- You and your staff can build a stronger set of core capabilities.
- You can be more enthusiastic and passionate about selling your product or service
- Your marketing can be more strategic, more focused.
- You are likely to need only one processing system, leading to a simpler business structure.
- You generally have less outlay in inventory and fittings.
When you are considering your own niche opportunities, your capabilities should be a primary concern. It’s your capabilities that ultimately define the quality of your product or service. Capabilities go with your other resources you are providing (including your product and other partner resources if any) to provide a crafted offering to help your customer meet her needs. Are you providing value to your customer with this offering?
The old thinking said yes, you were, but it was goods-dominated thinking that said as you make something you are adding Value to it. So who decides what is valuable? It’s not you, it’s the customer, it’s always the customer who decides if something is valuable to her, and especially so in the context of where they are using it.
This is service-dominated thinking.
(Someone once drove this point home to me by giving the example of a hot dog stand, and what you would need to make it successful. Our workshop team came up with all sorts of responses like best position, best buns, best sauce and so on, but the best answer was “a ravenous crowd.” All those other things meant nothing otherwise. That’s context.)
So what creates value is the combination of the resources you put forward and the resources the customer has (knowledge, skill, knowing how to eat with chopsticks), using those resources in context.
That brings you back to meeting the niche need, and that is, what is the job that the customer wants to get done? You succeed best when you add your capabilities and resources to those of your customer to co-create value.
Is your offering going to be perfect from day one?
If it is you’ve probably been missing the boat in terms of lost earnings. The best way to build your niche from scratch is to offer the minimum viable product you can, to a limited number of customers. Learn from their feedback. You might be lucky enough to get feedback that will have you redesign what is more in line with what people really want, not what you think they want. Use the profits from those few sales to refine your offering for 10 times as many people. Learn and refine again.
The other aspect of this cycle that I really like is that each new offering is a breath of fresh air from your earlier buyers, and gives them a renewed interest in spreading the word.
Nature of Restaurants Everywhere
As is the nature of restaurants everywhere, competition is fierce and many turn little or no profit. In Ubud alone, Trip Advisor ranks 279 restaurants, up from 259 only 3 months ago. The more successful ones are certainly those that have carved a niche, while the most successful are those with a clear niche that is very focused on helping their customers meet a specific customer need, and performing that offering with service excellence.
Some use fine dining, some use entertainment, some use regional cuisine, some specialize in coffee, some in organic food and/or vegetarian, some have their own groupies. Naughty Nury’s original niche was providing service excellence for the local gay community then followed by Hash House Harriers. About 13 years ago Nury’s birthday was celebrated that night with some masculine-featured women in short skirts and long hair up dancing on the tables. The Harriers were all banging their beers on the tables and other locals were swirling their martinis in joyful chorus. Then it got famous.
Customer needs in a Restaurant:
Customer needs in a restaurant are varied and staff at the best restaurants can quickly recognize how the customer wants to make use of your resources in their context at that time. People in a hurry have a totally different service need from those out to celebrate a birthday, and a boisterous birthday celebration has a different customer set of needs for a romantic wedding anniversary. But whatever their current need, your aim as the restaurant owner has to always be striving to convert them to regular customers, who are happy to consider your place one of their “Top 3.”
Is there is any aspect of developing a successful business you would like me to write about? Next issue I will be responding to a request to look at the website business model surrounding a “free” offer for songs.
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