It’s not uncommon to see businesses operating endless product cycles in which they constantly push out new products or services of varying qualities to widely undefined target markets. While this might work for big corporations like Google (think Google Hangouts, Google+), in order to grow, the majority of businesses should avoid falling into the trap of developing multitudes of offerings. Instead, organisations just starting out should stop and make time to understand what their business needs. Companies ultimately have two options here: pinpointing accuracy or broadening range. Frequently, companies go for the latter as it’s considered the easier option, however, there is arguably more success to be had by following the former.
Businesses will achieve more by finding a niche and developing a sole, great product, and new variants of this as time and technology moves on, rather than throwing money into different product developments that don’t drive growth. A perfect example of this is Beats Electronics, which has forged strong roots in a specific area: headphones. Beats headphones have become a staple among consumers and are also frequently worn by celebrities, and its success led to the company being bought by Apple for $3 billion – the largest acquisition in Apple’s history.
In order to successfully adopt this model, businesses must pinpoint a niche and place it at the heart of the organisation’s development, by following these simple steps.
Organisations firstly need to unearth a gap in the market, such as a problem that no other companies or products are addressing, or at least, aren’t addressing well and ensure that the demand is there. Market research is essential to identify the niche, the market it addresses and the competitive landscape.
Companies must gain a meticulous understanding of the competition and what they are doing by undertaking thorough and regular competitor analysis. It’s important to remember there’s no shame in copying the competition as long as you can do it better. Today, only 1% of businesses are genuinely doing something new and 99% are variants, so in order to thrive, enterprises need to analyse what they’re good at, what their competitors are doing and how they can do that better.
Maintaining client satisfaction
The key to securing big clients is doing something extremely well and making their lives much easier. Rather than this being a priority once or twice a year in line with product cycles, businesses should retain adaptability in order to evolve their product to answer new demands as they arise. For example, at Imagen, while our core product remains the same for every client, we retain adaptability so that we can add new features tailored to specific client requests. By doing this, alongside frequently monitoring the competitor landscape and checking your product continues to address a need and a market, it is possible for businesses to ensure that their product remains the best and that they become recognised experts in their field.
Routes to diversification
Vitally, cornering a niche with a single product doesn’t mean that it won’t be possible to diversify or venture into new markets. It just means they can’t follow the traditional route and must build on their expertise in other ways. There are three approaches open to organisations in this scenario:
- The first option is to create adjacent products that are new and different from those the company currently offers, which is something Beats has done successfully. While the Beats brand is most commonly associated with headphones, in subsequent years, it has also created a line of speakers and car audio systems, all of which continue to use its underlying technology but are different from its original product offering.
- Secondly, businesses could look to buy a competitor that operates in a similar field to their organisation. For instance, a high-end retailer may consider buying a more budget store which would allow them to benefit from being able to target a new demographic.
- The final option, and my preference, is to expand geographically. Geographical expansion tends to provide the best return as it often allows organisations to use their existing product and retain the underlying technology. Although some investment may be needed to localise the solution for new markets, this would be beneficial in the long-run.
While many businesses still follow the path of creating a range of products and regularly developing new ones, the idea that it is the only or even the best way to grow is completely misguided. The likes of Beats, Dyson and Apple demonstrate this – each of which is a leader in its field and started with a core product but over the years has begun to diversify with adjacent products. By finding a niche and perfecting a single product, it’s possible for a company to corner an entire market that’s currently being underserved. This route doesn’t rule out the ability to diversify but allows the organisation to establish itself first and gain expertise, before looking to break into new markets or develop similar products.