The Benefits of Niche Markets on Small Business Success

Small and large businesses use different approaches to successfully navigating their markets based upon the resources available to them. Large businesses reach for larger target segments while smaller businesses focus on attracting a smaller group of motivated customers. Niche markets offer an entry position for small business to start building their customer base before expanding into new niches.

Small Business Does Well in Underserved Markets

Small businesses are likely to succeed in markets currently not being served sufficiently by other businesses. They do so through creating brand recognition among those that desires their unique types of products and services.  Highly motivated customers will recognize the brand the next time they consider making a purchase.

For example, it would be extremely difficult for a small business to compete against a large retail outlet by selling disposable pens. However, through selling unique pens, customized pens, embroidered pens, and handmade pens they can offer products that larger stores wouldn’t find lucrative enough to carry in their national chains. 

Customers will remember the specialty store as the easiest and most convenience place to purchase their chose products. The customer weighs and balances all of their options and knows that such gifts are easier to obtain from the customized provider. There is little reason to drive from store to store trying to save a few dollars when a specialty store has what you want. 

Small Business Can Expand Revenue through Complementary Products and Services

Once a small business reaches a sustainable level within their niche product/ service market they can consider adding additional products and services to expand revenue streams. In the example of pens, the business might also consider complementary niches such as unique stationary and paper.  

Selling similar niche products provides opportunities for overlapping benefits (Bruggeman, et. al., 2012). Pens and stationary are categorically connected in consumer minds and if they are looking for high quality pen and paper they have a place to obtain these items. The two types of products regularly attract the same types of people. 

Niche business also allows for successful niche marketing that improves the success rate of the business (Rankin, 2007). Marketing efforts can be focused specifically toward those customers who are most likely to buy a particular product.  Such efforts cut down on waste and low investment returns in business expenses. 

Bruggeman, J. et. al. (2012). Market positioning: the shifting effects of niche overlap. Industrial & Corporate Change, 21 (6). 

Rankin, M. (2007). Niche marketing allows advisers to build habitat for business success. Employee Benefit Adviser, 5 (12).

E-Marketing Effectiveness and Small Business Management

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Small business owners sometimes wonder whether e-marketing can have a significant impact on their sales. Business is about positive return on activities and e-marketing is one tool some small businesses don’t yet understand.  A study by Eid & El-Gohary (2013) discusses how there is still a lack of systematic empirical evidence regarding online marketing but by analyzing budgets, tools, pre-sales activities, and after-sales activities, performance and effectiveness of marketing in 114 small businesses they can get a better perspective of e-marketing activities. 

Small business maintain similar characteristics that puts them within the same broad category. Small business are independently owned, managed by the owners, financially connected to the owners, and most of the important decisions are made by the owners. The use of decision e-marketing is not that familiar among many small business owners and they will need a personal investment of time, effort and resources to make it work. 

When small businesses are successful in their e-marketing practices they can find an increase in profits, market share, brand equity and productivity. Their business moves to a higher level of customer attraction and retention that helps them grow their opportunities both personally and financially.  Marketing costs can be reduced for businesses that successfully find a mix that works for them. 

It was found that the EM budget, pre-sales marketing and after-sales marketing explain 71.4% of e-marketing performance 76.3% of marketing effectiveness. E-Marketing can have an impact on successful sales generation. There is a net positive result of marketing and sales returns in the virtual world. The use of specific skills didn’t seem to be as important as engaging in the overall process of online marketing. Companies that begin move, study, explore and implement online marketing campaigns regularly find their bottom lines improving. 

To people who have run their mom and pop shops for years advertising in their local newspapers, building displays, and attracting customers with sales the transition to online can be difficult. They need not give up what works in traditional approaches to enhance those messages with online components. It wouldn’t be recommended anyway. Marketing is about finding what works and seeing how the different methods of marketing mix together to create effectiveness. 

Eid, R. & El-Gohary, H. (2013). The impact of e-marketing use on small business enterprises’ marketing success. Service Industries Journal, 33 (1).

Collaborating Small Business to Overcome Financial, Social and Political Constraints

Small businesses have a hard time competing due to financial, social, and political constraints on their resources. A paper by Evans (2013) explores the political dynamics and process of institutional change that underlines policy approaches that focus on modernizing small firms in Portugal. Their comparative-historical analysis helps show that successful industrial upgrading relies on intense and sustained political action led by leadership in an effort to develop benchmarks and proper implementation of financial strategy. 

Small businesses often lack resources to compete in a market dominated by better financed international companies. Payroll, financing, business, systems, etc… were not always updated appropriately. Small businesses also regularly failed to meet inappropriate legislation focused toward larger organizations leaving them unable to grow or develop.  

Other problems small business face is the legal and political structure of a country that focuses more heavily on larger industries. This structure can make it difficult for small businesses to meet regulations, export quantities, and other minimum standards. The lack of understanding of the needs of small business can have a long-term impact on the success of new entrepreneurial development. 

Small business can work in collaboration to build a stronger political voice that can impact the legal frameworks of a nation and encourage greater fairness in development. They may also work together to share resources such as payroll, financing, legal representation, etc… Sharing resources narrowed economies of scale advantages found in larger businesses. 

The study helps highlight how local and national governments must work together to ensure fresh development of industry innovation, new businesses, and stronger economic competitiveness. Small businesses will need to overcome their individualistic approaches and rivalry oriented strategies to create stronger collaboration that leads to social, economic and political transformation.  Leaders can encourage changes within the structure to ensure greater concern and competitiveness of small businesses development within their sectors that has an impact on economic development.  

Evans, A. (2013). Building institutional capacity: from pervasive individualism to sustained coordination in small firm sectors. Business & Politics, 15 (2).