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Niche marketing strategy is crucial for SMEs’ success, new study says



July 20, 2017 — According to a recent study, which examined a huge swath of literature on Small and Medium Enterprises (SMEs) and their effectiveness, SMEs are most likely to find success if they adopt a niche marketing strategy – an approach focused on targeting a small market of consumers in an attempt to fill their needs and develop a strong, lasting relationship.

The most fundamental threat to SMEs, which make up over 90 percent of the world’s business, is the ultra-competitive and over-advertised global marketplace. To survive this common pitfall and to capitalize on markets despite having low budgets, the study argues that SMEs need to find a small market of consumers with similar demographics, buying habits, and lifestyle characteristics, meaning focusing on fewer customers and in turn, facing less competition.

Niche Marketing Strategy

In addition to targeting fewer customers and avoiding competitors, niche marketing strategies are characterized by building long-term relationships, by filling customer’s needs that are often ignored by mainstream businesses, by developing a strong reputation, by using word-of-mouth references, and by focusing on specialized and high-quality products and services.

Proponents of niche marketing strategy argue that small and medium sized businesses can thrive by pushing unique and differentiated products and services to specific consumers groups who have been not been satisfied by larger companies. SMEs exploit many of the same market characteristics to become successful – the market is concentrated and small but big enough to be profitable, there’s limited competition, the targeted consumers have sufficient purchasing power, and there are unfulfilled needs.

Much of niche marketing strategies’ success owes to the deep loyalties it builds with customers. Unlike large companies, SMEs who practice niche marketing have small customer bases and therefore, it is easier for them to know and satisfy the needs of those customers. This, in turn, builds a strong loyalty between the consumer and business and can lead to many more sales.

Niche markets have the potential to be more profitable than mass markets because SMEs using niche marketing strategies can meet the needs of the subset market better than a large company casually selling to the same market segment, and therefore, charge a higher price.

Search for a Market Niche, and You Might Find a Crowd

Jenna Wortham, New York Times

The success and failures of SMEs have vast implications for a nation’s economy, especially in developing countries, according to the authors of the study. In particular, SMEs make a significant impact on regional economies, job creation, the production of essential goods and services, and the development of rural economies. Therefore, it is imperative for small businesses to adopt a niche marketing strategy in order to thrive in the competitive global marketplace.

Niche marketing strategies not only work as effective tools for the survival and success of SMEs, but they also offer businesses a great chance at growth. Apple’s first release of the iPad is a perfect example of the benefits and potential of niche marketing strategy. Apple saw and exploited the niche market for tablet computers and turned it into a mass market, which it now dominates.


“The iPad will remain an expensive, niche device compared to all-purpose netbooks…. (N)etbooks sales will still far outstrip those of the iPad.” Preston Gralla, PC World, 30 March 2010

Examples of SMEs building niche markets before developing into globally known brands is not unheard of. Patagonia started as an outfitter for hardcore outdoor enthusiasts before becoming wildly popular among young adults. Square, a software that allows merchants to accept debit and credit card payments through a tablet or mobile phone, used innovation to find a niche market and is now used by millions of small businesses. And Whole Foods began as a grocery store focused on bringing organic food to health-conscious shoppers before healthy eating and organic food joined the mainstream.

Niche market or success story?

The study also notes that in a survey of 1000 Fortune companies, all of the respondents said they have started to serve niche markets for some of their products and services. Another survey cited by the authors discovered that businesses received a 27 percent return on investment from smaller markets compared to only 21 percent from larger markets.

“Therefore, proper identification of a target market and niche marketing strategies has a positive impact on a firm’s overall success and competitiveness,” said the authors.

Smaller businesses aren’t the only ones who benefit from niche marketing strategies. Like Apple mentioned above, large companies are more and more looking to smaller markets to diversify and stay competitive. Many of these businesses are exploiting a host of niche markets as well as their traditional mass markets.

T-Mobile, struggling against its giant competitors AT&T and Verizon Wireless, launched its “Un-carrier” campaign that switched from its mass marketing strategy and targeted a niche market of young, fed-up cell phone users who were dissatisfied at how cellular carriers were treating them. T-Mobiles niche marketing campaign was successful because it differentiated itself from the other major carriers and hence, limited competition and now the company is the fastest growing carrier in the US.

This recent study is further proof that niche marketing strategy is beneficial to SMEs survival and success by generating increased profits through building deep relationships with customers and by reducing competition. The literature examined by the authors Dr Abdul Razak Bin Omar, Fazli Wadood and Prof. Wan Zahari Wan Yusoff of Tun Hussein Onn University of Malaysia,  also showed that a niche marketing strategy is a viable option for small business with limited funds as well as gives them an opportunity for growth.

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Influencer marketing

Effectively Branding in the Age of Social Media Influencers

Harry Suresh




Many brands find navigating the influencer marketing landscape to be relatively difficult due to the novelty of this new marketing concept. As a result, we discuss three most fundamental techniques and strategies for effective branding on various social media platforms.

1. Metrics and data

Social media influencer landscape seems like the Wilde West of marketing. Nobody is exactly certain where this relatively new marketing trend is going. Various marketing platforms and agencies are claiming to be an influencer marketing experts, that are capable to take your brand to the next level. In such an uncharted territory, it is important to stick with quantifiable metrics and data when it comes to making decisions about a solid social media influencer marketing campaign. The ROI of an influencer marketing strategy should always be the primary indicator.

A lot of SMEs and small brands want to skip the basic principles and simply move on with the vanity of shiny numbers of paid influencer traffic. However, research has shown that regardless of what you were told, there is no quick fix to branding or marketing your product, unless you are a large and well-established company willing to shell out a large sum of money to big-name agencies to get it done.

2. Personable experience

Having a brand that is easy to identify with and the one that offers organic connections and personable content is the number one and one of the most fundamental steps in effective branding on social media. Organic is the key. Nowadays consumers are tired of mega corporations and big name businesses pushing their products again and again on Youtube, Facebook, Amazon or other platforms.

Consumers are tired of feeling used or being shamelessly marketed to just for these big brands to reach their bottom lines. A modern consumer wants organic and real connections from personable businesses. Brands that offer organic connections and have a strong presence on the social media tend to perform better, sell more and are way ahead of their competitors.

In the age of social media influencers, it’s crucial that brands are bringing something up through service to their consumer base, because this is one of the main ways that successful businesses are able to achieve exponential growth. Individuals flock to brands which they feel they can gain something from, learn something from and get a product or service that is specifically tailored for them. This expectation can’t be changed by a single tweet or Facebook post from a successful social media influencer.

3. Logo system

Logo is one of the most important elements when it comes to brand recognition. Whether it would be advertised on the billboard in the middle of a city or asking social media influencer to promote your brand, logo is the first thing that consumers will notice.

A video produced by Vox media, “What makes a truly great logo”, explains in detail how a simple mark ends up meaning something big. Furthermore, it suggests that using an unified logo system is the most trendy and universal approach to brand your product or services on multiple social media platfroms.

Trekking through the uncharted territory of social media influencers may feel a bit overwhelming for brands, both new and established alike. It is important to take a look at quantifiable metrics and data in order to make business decisions about your branding. Do your due diligence and research before blindly trusting baseless claims from the endless number of “influencer marketing experts” in your niche.

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Marketing Insights

10 Ways Brands Can Boost Their Gen Z Marketing

Harry Suresh




A slew of recently published studies shed light on how brands can reach out to Gen Z consumers (typically defined as individuals born after 1995). In particular, the findings provide key insights on Gen Z’s spending and shopping habits, their brand loyalties and engagement, and the best marketing strategies to reach them.

Although Gen Z consumers don’t have as high of a spending budget yet as the generations before them, they still have $44 billion in buying power and are the largest generational cohort in the US coming in at over 60 million individuals. This latter key stat has brands and marketers scrambling to capitalize on their buying for years to come by building brand awareness now — 59 percent of Gen Z consumers said they trust brands they grew up with. But as the newest and least studied generation, brands all too often misunderstand the Gen Z market and don’t know how to effectively advertise their products to them.

Here are 10 ways brands can boost their Gen Z marketing, according to recent studies:

1. Gen Z values price and quality over brand name

A study last week by advertising agency Saatchi New York found that Gen Z cares little about traditional brand names or cleverly-branded names, for that matter. Rather, Gen Z covets high-quality products and brand authenticity. The Saatchi study further states that Gen Z consumers tend to be very skeptical of brand imaging. A similar IBM study found that over 50 percent of Gen Z-ers are willing to switch brand loyalty if a product is not up to snuff. Instead of manufacturing a perfect brand image, marketers should push more personalized and purpose-driven marketing at Gen Z-ers.

2. Gen Z consumers are less price conscious than Millennials and more willing to buy luxury brands

Echoing the finding from above, Gen Z shoppers highly value quality products and are willing to spend the extra cash in return for better quality. Unlike millennials, Gen Z is more and more frequently ditching discount stores like Ross, Rainbow, and Burlington for more traditional, luxury brands and upscale retailers like Vans, The North Face, and Ugg; according to a report from InMarket. And Gen Z consumers are less likely than both millennials and baby boomers to compare prices while shopping, according to Euclid Analytics.

3. Gen Z, surprisingly, love Brick-and-Mortar stores

Gen Z-ers have never known a world without cellphones or the internet, but, despite this, the group highly values shopping in person rather than online. The case is especially true when it comes to clothing, shoes, accessories, and makeup. According to the IBM report, 67 percent of Gen Z respondents shop in physical stores “most of the time,” and another 31 percent shopping at brick-and-mortar stores “sometimes”.

4. Gen Z is the mobile generation and mobile video is the best way to reach them

Just because Gen Z-ers don’t do most of their shopping online, it doesn’t mean that the internet and their mobile phone don’t play a huge role, especially in regards to video. In fact, 71 percent of Gen Z consumers say they use their cellphone to watch mobile video daily, compared to 51 percent who watch video on their TV daily and only 45 percent who watch video on their computer daily, according to a report from the ad firm Sharethrough. And since Gen Z’s mobile phones are their primary means of video consumption, it is important for brands to incorporate mobile video into their marketing strategies if they intend to win over Gen Z consumers.

And since Gen Z’s mobile phones are their primary means of video consumption, it is important for brands to incorporate mobile video into their marketing schemes if they intend to win over Gen Z consumers. According to Sharethrough’s findings, Gen Z-ers favored mobile videos that allow them to preview the video silently in-feed before viewing it and while reading the headline and description. The study also found that the headline and first three seconds of the video has a large impact on if Gen Z consumers will watch a mobile video. Marketers and brands should be wary of using ads that try to control Gen Z web behavior or disrupt their user-experience — 56 percent of respondents said these are the main reasons they use ad blockers.

5. Social media influences Gen Z’s shopping habits

In addition to reaching Gen Z through mobile video, brands should devote significant resources to drawing them in through social media as well — over 80 percent of Gen Z-ers say that social media influences their purchases compared to 74 percent of millennials, according to research done by Yes Lifecycle Marketing. Apps like Instagram (44%), Youtube (32%), and Snapchat (%21) are some of the biggest drivers in Gen Z purchasing decisions.

6. Gen Z are well-informed shoppers

When a Gen Z shopper walks into a store, they already know what they are looking for — or at least a staggering 98 percent of them do, according to the IBM report. On top of this, Gen Z-ers are more likely than any other generation to ask for help or seek advice from a store associate and they expect these associates to be as informed as they are on the store’s products and services. Companies like Apple and Best Buy excel at giving customers the online information they need as well as an in-store experience to match.

7. Meaningful engagement is the best way to reach Gen Zers

Gone are the days of traditional, straightforward product marketing. Now, brands are having to lead a full-fledged marketing campaign that not only advertises its product but inspires and draws the ever skeptical newer generations in. For Gen Z, this is especially true. Gen Z shoppers look for relevance and authenticity rather than a manufactured image. If they don’t get that, then their brand loyalty will go elsewhere. Influencer advertising on Instagram and Youtube is a great way of achieving this — if the influencer is trusted and transparent, that is.

8. Gen Z are more likely to participate in loyalty programs and product reviews

Although not as high as Millennials (71%), most Gen Z consumers (63%) participate in at least one loyalty program and the majority of both (64%) “could be persuaded to shop with a brand if they have a loyalty program,” according to firm CrowdTwist. In particular, Gen Z-ers prefer to play games and write product reviews to gain loyalty points.

9. Gen Z consumers seek a personalized shopping experience

One thing that both millennials and Gen Z share in common — 75 percent, according to CrowdTwist — are their willingness to give over personal information to companies if it means a more personalized shopping experience. Even more, Gen Z-ers expect brands to know and appreciate them just as much as they know and appreciate the brand.

10. Gen Z wants to make a difference if they can

Not only do Gen Z consumers expect a shopping experience tailored to their personality, they also want their brands to be socially conscious. According to the Saatchi New York report mentioned above, Gen Z-ers are even more likely than millennials to give their money to companies who do good in the world — “79 percent said they would engage with a brand that could help them make a difference.”

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Marketing Insights

Native Ads Resulting in Higher Brand Recognition and Click-through Rate,Study Finds




ANN ARBOR, MI — July 29, 2017.  A study conducted by Associate Professor of Marketing  Anocha Aribarg and Assistant Professor Eric Schwartz  at the University of Michigan,  found that Native ads can capture greater attention, resulting in higher brand recognition and click-through rate.

Recent developments in regulatory and industry practice have raised questions regarding native advertising’s ethics and efficacy. On the ethics end, the U.S. Federal Trade Commission (FTC) requires all advertisement disclosures be “clear and prominent,” and that rule applies to native formats as well.

The takeaway for native advertising is simple: “you must make clear that advertising is advertising” so that consumers do not confuse ads with editorial content. From the efficacy standpoint, some studies, sponsored by the advertising industry, claim that in-feed native advertising garners higher click-through rates than traditional display advertisings. But no academic research has provided direct empirical support for this claim. To date, studies have been limited to native ads in the search format (e.g., paid restaurant listings on Yelp, paid listings in Google search).

Although “search” and “in-feed” ads are related, the two formats of native ads are sufficiently different that any conclusions regarding search-based native advertising may not translate to in-feed advertising. In order to fill this research void, prof. Anocha Aribarg’s research focuses on the in-feed native format and aims to assess consumer responses to native ads, as compared to traditional display ads.

For their study, researchers used a multi-method approach to collect and examine data: an experiment with surveys of consumer experience with an online news website, an eye-tracking experiment of participants browsing different versions of a live navigable news site and a field experiment with a business-news publisher with over 125,000 newsletter subscribers. According to scientists focusing on four key metrics – click-through rate, brand recognition, confusion, and evaluation of overall experience – contributes to internal and external validity.


Display and small native ads used as stimuli for “Consumer Responses to Native Advertising” study

Observational data alone is inadequate to compare the effectiveness of native ads to that of display ads or different formats of native ads because advertisers typically do not advertise in a randomized manner across multiple formats in the same campaign using comparable ad stimuli. But randomized lab and field experiments facilitate these comparisons. The attention and browsing measures from eye-tracking data shed light on underlying process driving the effectiveness of native advertising.

Marketing scientists noted that one advantage of a native over a display ad is that its format is highly congruent with that of the surrounding content. According to the theory of association transfer based on feature similarity, native ads’ resemblance to credible editorial content may also bestow credibility to the ads.

In addition to format resemblance, native ads are presented in closer proximity to editorial content than display ads. However, researchers hypothesize that these two features of native ads—format resemblance and proximity—could draw more consumer attention to native ads and, as a result, help them generate higher click-through rates and brand recognition than display ads.

“Our results showcase the superior performance of native over display ads in generating higher click-through rate and brand recognition. Native ads can draw more attention from consumers as they benefit from attention carry-over due to their resemblance and proximity to editorial content,” – concluded scientists.

Professor Anocha Aribarg and Assistant Professor Eric Schwartz noted that there are regulatory and economic questions surrounding the native advertising industry. Due to concerns about deception, the regulation of native ads’ disclosures is the focus of the FTC’s efforts.

According to its FTC guidelines, a disclosure’s adequacy is measured by whether reasonable consumers perceive the ad as advertising; “only disclosures that consumers notice, process, and understand can be effective.”  The Federal Trade Commission clarifies “how to make clear and prominent disclosures in native advertising” by specifying proximity and placement, prominence, and clarity of meaning as the keys.

“Our findings suggest that using highly prominent disclosure, featuring the brand name and logo in the native ad, to generate brand awareness is a win-win strategy that is aligned well with the FTC guidelines,” – say the authors of the latest study.

At the same time as these legal and ethical concerns, there is growing managerial need to understand the economic prospects of native ads. While technology has expanded advertising capabilities, other technology trends threaten advertising revenue.

More consumers than ever use online ad blocking tools, with 26% of U.S. users in 2017 employing the software on their desktop devices and over 300 million users have adopted a popular ad blocking software on mobile devices by 2016. In response, advertisers seek forms of promotion that will not be blocked, one solution, in some forms, is native advertising.

Such a managerial concern is motivating researchers to compare the effectiveness of native ads compared to traditional display ads. Using eye-tracking data, scientists also examine attention as a mechanism to drive the effectiveness of native advertising.

In 2017, native advertising saw the biggest growth in ad buyers  — a finding that conforms with the latest research. “The number of ad buyers purchasing native ads increase 74% YoY in Q1 2017, the largest increase of any ad format measured. Native ad formats outperform traditional ad units, and even though they’re more expensive, they garner higher click-through rates,” – Kevin Gallagher, research analyst at BI Intelligence , wrote in Business Insider.


Data sourced from “Consumer Responses to Native Advertising” ,Social Science Research Network; additional content by staff

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