Encyclopedia

Michael Porter
has described a category scheme consisting of three general types of strategies
that are commonly used by businesses to achieve and maintain competitive advantage.
These three generic strategies are defined along two dimensions: strategic scope and
strategic strength. Strategic scope is a demand-side dimension (Porter was originally an
engineer, then an economist before he specialized in strategy) and looks at the size and
composition of the market you intend to target
. Strategic strength is a supply-side dimension and looks at the strength or core
competency
of the firm. In particular he identified two competencies that he felt were most
important: product differentiation
and product cost (efficiency
He originally ranked each of the three dimensions (level of differentiation, relative
product cost, and scope of target market) as either low, medium, or high, and
juxtaposed them in a three dimensional matrix. That is, the category scheme was
displayed as a 3 by 3 by 3 cube. But most of the 27 combinations were not viable.

In his 1980 classic Competitive Strategy: Techniques for Analysing Industries and
Competitors, Porter simplifies the scheme by reducing it down to the three best
strategies. They are cost leadership, differentiation, and market segmentation (or focus).
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Market segmentation is narrow in scope while both cost leadership and differentiation
are relatively broad in market scope.
Empirical research on the profit impact of marketing strategy
indicated that firms with a high market share were often quite profitable, but so were
many firms with low market share. The least profitable firms were those with moderate
market share. This was sometimes referred to as the hole in the middle problem.
Porters explanation of this is that firms with high market share were successful because
they pursued a cost leadership strategy and firms with low market share were
successful because they used market segmentation to focus on a small but profitable
market niche. Firms in the middle were less profitable because they did not have a
viable generic strategy.
Porter suggested combining multiple strategies is successful in only one case.
Combining a market segmentation strategy with a product differentiation strategy was
seen as an effective way of matching a firms product strategy (supply side) to the
characteristics of your target market segments (demand side). But combinations like
cost leadership with product differentiation were seen as hard (but not impossible) to
implement due to the potential for conflict between cost minimization and the additional
cost of value-added differentiation.
Since that time, empirical research has indicated companies pursuing both
differentiation and low-cost strategies may be more successful than companies
pursuing only one strategy.
Some commentators have made a distinction between cost leadership, that is, low cost
strategies, and best cost strategies. They claim that a low cost strategy is rarely able to
provide a sustainable competitive advantage
. In most cases firms end up in price wars. Instead, they claim a best cost strategy is
preferred. This involves providing the best value for a relatively low price.
Cost Leadership Strategy
This strategy involves the firm winning market share by appealing to cost-conscious or
price-sensitive customers. This is achieved by having the lowest prices in the target
market segment, or at least the lowest price to value ratio (price compared to what
customers receive). To succeed at offering the lowest price while still achieving
profitability and a high return on investment, the firm must be able to operate at a lower
cost than its rivals. There are three main ways to achieve this.
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The first approach is achieving a high asset turnover. In service industries, this may
mean for example a restaurant that turns tables around very quickly, or an airline that
turns around flights very fast. In manufacturing, it will involve production of high volumes
of output. These approaches mean fixed costs are spread over a larger number of units
of the product or service, resulting in a lower unit cost, i.e the firm hopes to take
advantage of economies of scale
and experience curve effects
. For industrial firms, mass production becomes both a strategy and an end in itself.
Higher levels of output both require and result in high market share, and create an entry
barrier to potential competitors, who may be unable to achieve the scale necessary to
match the firms low costs and prices.
The second dimension is achieving low direct and indirect operating costs. This is
achieved by offering high volumes of standardized products
, offering basic no-frills products and limiting customization and personalization of
service. Production costs are kept low by using fewer components, using standard
components, and limiting the number of models produced to ensure larger production
runs. Overheads are kept low by paying low wages, locating premises in low rent areas,
establishing a cost-conscious culture, etc. Maintaining this strategy requires a
continuous search for cost reductions in all aspects of the business. This will include
outsourcing, controlling production costs, increasing asset capacity utilization, and
minimizing other costs including distribution, R&D and advertising. The associated
distribution strategy is to obtain the most extensive distribution possible. Promotional
strategy often involves trying to make a virtue out of low cost product features.
The third dimension is control over the supply/procurement chain to ensure low costs.
This could be achieved by bulk buying to enjoy quantity discounts, squeezing suppliers
on price, instituting competitive bidding for contracts, working with vendors to keep
inventories low using methods such as Just-in-Time purchasing or Vendor-Managed
Inventory. Wal-Mart is famous for squeezing its suppliers to ensure low prices for its
goods. Dell Computer initially achieved market share by keeping inventories low and
only building computers to order. Other procurement advantages could come from
preferential access to raw materials, or backward integration.
Some writers posit that cost leadership strategies are only viable for large firms with the
opportunity to enjoy economies of scale and large production volumes. However, this
takes a limited industrial view of strategy. Small businesses can also be cost leaders if
they enjoy any advantages conducive to low costs. For example, a local restaurant in a
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low rent location can attract price-sensitive customers if it offers a limited menu, rapid
table turnover and employs staff on minimum wage. Innovation of products or
processes may also enable a startup or small company to offer a cheaper product or
service where incumbents' costs and prices have become too high. An example is the
success of low-cost budget airlines who despite having fewer planes than the major
airlines, were able to achieve market share growth by offering cheap, no-frills services
at prices much cheaper than those of the larger incumbents.
A cost leadership strategy may have the disadvantage of lower customer loyalty, as
price-sensitive customers will switch once a lower-priced substitute is available. A
reputation as a cost leader may also result in a reputation for low quality, which may
make it difficult for a firm to rebrand itself or its products if it chooses to shift to a
differentiation strategy in future.
Differentiation Strategy
Differentiation is aimed at the broad market that involves the creation of a product or
services that is perceived throughout its industry as unique. The company or business
unit may then charge a premium for its product. This specialty can be associated with
design, brand image, technology, features, dealers, network, or customers service.
Differentiation is a viable strategy for earning above average returns in a specific
business because the resulting brand loyalty lowers customers' sensitivity to price.
Increased costs can usually be passed on to the buyers. Buyers loyalty can also serve
as an entry barrier-new firms must develop their own distinctive competence to
differentiate their products in some way in order to compete successfully. Examples of
the successful use of a differentiation strategy are Hero Honda, Asian Paints, HLL, Nike
athletic shoes, Perstorp BioProducts, Apple Computer, and Mercedes-Benz
automobiles.
A differentiation strategy is appropriate where the target customer segment is not pricesensitive, the market is competitive or saturated, customers have very specific needs
which are possibly under-served, and the firm has unique resources and capabilities
which enable it to satisfy these needs in ways that are difficult to copy. These could
include patents or other Intellectual Property (IP), unique technical expertise (e.g.
Apple's design skills or Pixar's animation prowess), talented personnel (e.g. a sports
team's star players or a brokerage firm's star traders), or innovative processes.
Successful brand management also results in perceived uniqueness even when the
physical product is the same as competitors. This way, Chiquita was able to brand
bananas, Starbucks could brand coffee, and Nike could brand sneakers. Fashion
brands rely heavily on this form of image differentiation.
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Some research does suggest that a differentiation strategy is more likely to generate
higher profits than is a low cost strategy because differentiation creates a better entry
barrier. A low-cost strategy is more likely, however, to generate increases in market
share. This however, may result from a limited understanding of 'profits'. Differentiation
strategies are indeed likely to result in higher gross and net profit margins due to the
pricing power created by perceived uniqueness and high customer satisfaction.
However, these higher prices will also likely result in lower sales volumes and lower
asset turnovers. As such, the effects on Returns on Capital are likely to be neutral. As
illustrated in the Dupont ratio therefore, a firm can achieve high profitability and Returns
on Capital by being either a successful differentiator (with high margins and low
volumes) or a successful cost leader (with low margins and high volumes). One strategy
is not necessarily more profitable than the other.
Variants on the Differentiation Strategy
The shareholder value model holds that the timing of the use of specialized
knowledge can create a differentiation advantage as long as the knowledge remains
unique . This model suggests that customers buy products or services from an
organization to have access to its unique knowledge. The advantage is static, rather
than dynamic, because the purchase is a one-time event.
The unlimited resources model utilizes a large base of resources that allows an
organization to outlast competitors by practicing a differentiation strategy. An
organization with greater resources can manage risk and sustain profits more easily
than one with fewer resources. This deep-pocket strategy provides a short-term
advantage only. If a firm lacks the capacity for continual innovation, it will not sustain its
competitive position over time.
Focus or Strategic Scope
This dimension is not a separate strategy per se, but describes the scope over which
the company should compete based on cost leadership or differentiation. The firm can
choose to compete in the mass market (like Wal-Mart) with a broad scope, or in a
defined, focused market segment with a narrow scope. In either case, the basis of
competition will still be either cost leadership or differentiation.
In adopting a narrow focus, the company ideally focuses on a few target market
s (also called a segmentation strategy or niche strategy). These should be distinct
groups with specialized needs. The choice of offering low prices or differentiated
products/services should depend on the needs of the selected segment and the
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resources and capabilities of the firm. It is hoped that by focusing your marketing efforts
on one or two narrow market segments and tailoring your marketing mix
to these specialized markets, you can better meet the needs of that target market. The
firm typically looks to gain a competitive advantage through product innovation and/or
brand marketing rather than efficiency. It is most suitable for relatively small firms but
can be used by any company. A focused strategy should target market segments that
are less vulnerable to substitutes or where a competition is weakest to earn aboveaverage return on investment.
Examples of firm using a focus strategy include Southwest Airlines, which provides
short-haul point-to-point flights in contrast to the hub-and-spoke model of mainstream
carriers, and Family Dollar.
In adopting a broad focus scope, the principle is the same: the firm must ascertain the
needs and wants of the mass market, and compete either on price (low cost) or
differentiation (quality, brand and customization) depending on its resources and
capabilities. Wal Mart has a broad scope and adopts a cost leadership strategy in the
mass market. Pixar also targets the mass market with its movies, but adopts a
differentiation strategy, using its unique capabilities in story-telling and animation to
produce signature animated movies that are hard to copy, and for which customers are
willing to pay to see and own. Apple also targets the mass market with its iPhone and
iPod products, but combines this broad scope with a differentiation strategy based on
design, branding and user experience that enables it to charge a price premium due to
the perceived unavailability of close substitutes.
Recent developments
Michael Treacy and Fred Wiersema (1993) have modified Porter's three strategies to
describe three basic "value disciplines" that can create customer value and provide a
competitive advantage. They are operational excellence, product leadership, and
customer intimacy.
Criticisms of generic strategies
Several commentators have questioned the use of generic strategies claiming they lack
specificity, lack flexibility, and are limiting.
In particular, Miller (1992) questions the notion of being "caught in the middle". He
claims that there is a viable middle ground between strategies. Many companies, for
example, have entered a market as a niche player and gradually expanded. According
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to Baden-Fuller and Stopford (1992) the most successful companies are the ones that
can resolve what they call "the dilemma of opposites".
A popular post-Porter model was presented by W. Chan Kim and Rene Mauborgne in
their 1999 Harvard Business Review
article "Creating New Market Space". In this article they described a "value innovation"
model in which companies must look outside their present paradigms to find new value
propositions. Their approach fundamentally goes against Porter's concept that a firm
must focus either on cost leadership or on differentiation. They later went on to publish
their ideas in the book Blue Ocean Strategy
.
An up-to-date critique of generic strategies and their limitations, including Porter,
appears in Bowman, C. (2008) Generic strategies: a substitute for thinking?
http://www.stratevolve.com/strategy_papers.htm

Segmentation, targeting and positioning

After developing objectives with a clear the marketing direction, your next step is to develop the
supporting strategies. These strategies can be broken into three areas:

Segmentation Define who are your customers

Targeting Defines the customers you want to attract

Positioning Your products place in the market in relation to rival products

Segmentation
How big is the total market, what part of it are you going after and who are your competitors?
Your firm has a number of different types of customer to consider. Although markets are diverse,
you can group customers with similar needs into segments. The following list provide possible
approaches in categorizing your segments.
Demographic Industry:
Which industries should we serve? Company size: What size companies should we serve?
Location: Which geographical areas should we serve?

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Operating variables Technology: What customer technologies should we focus on? User/nonuser status: Should we serve heavy users, medium users, light users, or non-users?
Customer capabilities: Should we serve customers needing many or few services? Purchasing
approaches Purchasing-function organization: Should we serve companies with highly
centralized or decentralized purchasing organizations ?
Power structure: Should we serve companies that are engineering dominated, financially
dominated, and so forth? Nature of existing relationships: Should we serve companies with
which we have strong relationships or simply go after the most desirable companies?
General purchase policies: Should we serve companies that prefer leasing? Service contracts?
Systems purchases? Sealed bidding?
Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
Situational factors
Urgency: Should we serve companies that need quick and sudden delivery or service? Specific
application: Should we focus on certain applications of our product rather than all applications?
Size of order: Should we focus on large or small orders?
Personal characteristics Buyer-seller similarity: Should we serve companies whose people and
values are similar to ours? Attitudes toward risk: Should we serve risk-taking or risk-avoiding
customers?
Loyalty: Should we serve companies that show high loyalty to their suppliers?
Assessing segments After identifying your segments, assess their attractiveness. You can use the
following criteria:

Accessible they can be reached and served

Identifiable clear understanding of the composition of the segment

Profitable and add value

Actionable has the resources to respond to customers in the segment

Effective contains customers with homogeneous characteristics and needs.

Establish a clear target market
After defining your segments, decide which segments they can serve with the available
resources. Consider the customers propensity to buy and the future potential of the segment, the
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level of competition for that segment, both now and in the future and your companys own
resources.
There are three key targeting approaches: undifferentiated marketing, differentiated marketing
and a concentrated or focused approach.
Undifferentiated
With undifferentiated marketing to the whole market, the decision is made to ignore
segmentation and target the whole as the differences between the customers are negligible. There
is an assumption that the market is homogeneous and can be reached with one marketing mix
approach.
Differentiated
With a differentiated approach the company identifies a number of segments in the market which
it thinks that it can serve well with its resources, and develops different marketing approaches to
meet the needs and satisfy the requirements of different customers in the different segments.
Focused Marketing
A company that decides to target a smaller part of the market can adopt a concentrated or focused
approach The organisation may choose to focus on one segment because it does not have the
resources to target any of the others even though they may be viable segments. If this is a
particularly small and narrowly defined part of the market the company may be considered to be
a niche player

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Example

Positioning
A positioning statement emphasizes the products place in the market in relation to rival products
it represents the point of distinction. There are five key elements in any positioning statement
that provide the necessary clarity of purpose:
1. Target market: Whom are you aiming at? Explain this succinctly, straightforwardly and in
a way that is easily understandable.
2. Buyers or influencers main problem: What does the product or service have to solve in
a functional and/or emotional way? Again, be succinct and direct and keep it simple.
3. Key benefit(s): What is the main advantage of using the product or service?
4. Competitors: Who is or are the main competitors and how is the key benefit of your
product or service different from what they offer?

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5. Features or attributes: Just how does the product or service manage to provide this
benefit?
Example:
1. Target market: Medium to large organizations operating in a distributed network
environment dealing fundamental changes within their IT environment where there is a
greater acceptance of the need to outsource services driven by recent competitive
pressures.
2. Buyers or influencers main problem: Consistency in quality worldwide.
3. Key benefits: Savings and efficiencies through centralisation and standardisation,
minimise overhead costs, eliminate intermediate production steps, reduce transaction
costs, optimise business processes across functional and organisational boundaries and
improve manufacturing efficiency.
4. Competitors: NextiraOne is viewed as the strongest competitor. Our geographical
coverage, Ericsson heritage, vendor independence and our competence in voice and data
will distinguish us form the competition.
5. Features or attributes: Damovos services are customised through a listening approach.
This is a structured process that turns a customers unstructured business issues into a
structured, formal service offering. Damovo is focusing on developing Customer
Intimacy (Treacy) by concentrating on the customer issues.
Competitive roles in the marketplace
After, choosing your target market, consider your competitive role in the marketplace. You need
to anticipate your rivals retaliation. Competitive roles differ between a company that dominates
the marketplace and one that occupies only a small niche. Clearly, the competitive position in the
marketplace will also effect the company's marketing mix strategies. The key is to take stock of
where you are and where you want to go to with your available resources. In this process, an
appreciation of the appropriate competitive roles is very important in developing your marketing
direction. The competitive roles to consider are market leader, market challenger and market
follower and their suggested marketing strategies.
Market leaders
Just about every market has an acknowledged market leader an organization with dominant
market share that sets the standards or rules in the marketplace. Obvious examples are Hewlett
Packard with printers, Levis with jeans, Microsoft with software and Canon with photocopiers.
Market leaders remain vigilant to the activities of close rivals trying to usurp their position by
exploiting some weakness in the marketplace. Classic battles would be Fuji versus Kodak,
Matsushita versus Sony and Compaq versus IBM.
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Marketing strategies for market leaders:

1. Attack challengers. Other strategies might be to attack challengers directly, for example
by price reductions, promotions or new technologies, such as with BT in the terrestrial
phone marketplace and Esso with the Price Promise.
2. Diversification. Of course, diversification is a good defensive move for market leaders as
it spreads their market base and leaves them less vulnerable to attack from any individual
challenger. For example, were Heinz to lose its dominance with Ketchup, it has other
markets to fall back upon and does not lose its shirt on this one market.
3. Expand the total market. Dominant market leaders need to expand the total market as
much as possible as they are the ones most likely to benefit, given their leadership
position. They can achieve this with strategies for market usage and new applications as
well as considering developing any niche markets previously neglected.
4. Defend market share. Alternatively they may need to defend their market share by
continual product innovation, service and brand building, to ensure buyer loyalty. This
strategy can be seen in companies like Gillette or Hewlett Packard.
Market challenger
Market challengers are substantial organizations in their own right, with sufficient resources and
skills to occupy the market leader spot. Any marketplace is dynamic and a companys fortunes
can go up or down.Market challengers normally do not completely destroy the business of the
market leader, but they can edge their way towards equality or gradually overtake the market
leader and marginalize their position. Of course, a successful market challenger that usurps the
leader changes its competitive role and as market leader has to look over its shoulder to retain
its new position.
Marketing strategies for market challengers
1. Attack leaders. Market challengers have little alternative but to attack leaders either
directly or indirectly. A concentrated all-out attack on a leader may be the best way
forward.
2. Attacking other challengers. Attacking other challengers, followers or smaller niche
players in the marketplace, rather than attacking leaders, can launch indirect attacks on
leaders. Such tactics will result in the challenger discreetly building share without going
head-tohead with the leader by picking-off weaker geographic markets or segments in socalled bypass attacks. For example, Swatch managed to outmanoeuvre Seiko in the
fashion segment.
Market follower

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Market followers make a conscious decision to chase and emulate the market decisions of
leaders and/or challengers. They may clone fashion, design, innovations, pricing, advertising and
so on and trade successfully upon the risks of other companies or institutions. Their profitability
emanates from their decision to forego investing in uncertain new product development or in
educating consumers to new ways of thinking in favor of simply following the actions of leaders
or challengers in the marketplace. Followers, by their nature, do not seek leadership or to
challenge a leader overtly. They can make good profits simply by providing imitations of leader
or challenger products.

Marketing strategies for market followers - stealth

Follow carefully, at a distance, and selectively By definition, market followers need to follow
leaders and challengers and not launch attacks. If they launch attacks, they will become
challengers and will need the requisite resources and skills to survive such combat.
Market niche
Sole market niche
Success with a niche policy is based upon the reality that market leaders or challengers have little
to no interest in niches. Thus, Bang & Olufsen can survive extremely well in its up market, style
conscious (but not expert) hi-fi marketplace, knowing that the likes of Sony or Marantz would
have great difficulty in stretching their image to challenge them. Similarly, in the brewing
industry most major breweries are simply not interested in developing products to rival micro
breweries with their wheat, herbal and chocolate beers. The secret of successful sole niching is to
operate within a niche that has very little appeal for major players in the wider marketplace.
Corporate Niche
As markets have increasingly fragmented, so many market leaders, challengers and even
followers have been drawn into the strategy of niching. Niching can be highly profitable and
sometimes offers opportunity for market leadership. Part of the reason Palm is still popular is
because of the fundamental design decisions made with the OS. Which is to be, above all, a
damn good organizer. Part of what Palm realized (and what Apple hadn't yet with the Newton) is
that user requirements for an organizer is significantly different from a computer. Users expect it
to work just as well as their wristwatch.
Marketing strategies for market nichers - Specialize
The basis of the market niche strategy is to specialise. Market niche strategies may be based
upon goods or services, segments, channels or promotional images. Best practice for sole nichers
is to develop more than one market niche so that the company or institution is less vulnerable to
attack from a rival. It is essential that a sole nicher be not seen as a potential rival to a leader or
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challenger, as this might lead to a direct attack. An ideal position for a sole nicher would be one
where just about everyone else in the marketplace regards their niche as too much effort. Leaders
or challengers can use niches either to entrench their positions or as a form of attack. As
discussed above, in the hands of leaders or challengers a niche can provide a basis for market
growth or for indirectly attacking a rivals market position.
Strategy Models - The Matrix
Ansoff matrix is a widely used framework that outlines some fundamental strategies for
marketers. It can be used to help shape strategies and also to develop marketing objectives. In
both areas the focus on products and markets are important elements in developing marketing
direction and shaping marketing decisions. Developed in the late 1950s, the matrix has now been
extended to include the added dimension of market need.
Growth in existing product markets strategy is to obtain growth from the existing position either
by gaining market share, increasing product usage or developing new applications. Many
companies use market share as the key to their strategy.
The idea of new product development to existing markets is to exploit market opportunities
amongst existing buyers and to fully develop the stretch potential of your products.
Market development strategies fall into two categories: geographic or new markets. Geographic
market development seeks new territories. In the global marketplace, this means international
markets, as with the US Starbucks Coffee shops opening in the UK and Singapore. It may be
new regions at a national level. Use new market growth after a company reaches geographic
saturation. It is often more expensive to pursue than geographic expansion as it requires targeting
previous non-user types. While geographic expansion also targets non-users, it is generally
within a familiar target type that has a known propensity to use the product (for example, the
characteristics of a Burberry customer are very similar in both New York and London).
Diversification involves doing some new marketing and may involve new products and new
markets by acquisition, merger or new ventures. In a related diversification the new business has
commonalities with the core business in terms of similar assets and skills. This might be the
strength of a brand name being such that it can stretch from one business to another as with
Harley Davidson motorcycles and clothing. By contrast it might be a technical strength such as
Hondas skills in the manufacture and development of combustion engines, which has seen it
diversify from cars to lawnmowers. Another aspect might be strength in R&D, such as with
General Electrics electrical engineering capabilities which have enabled the company to
diversify around a number of defense, business and consumer markets. The risks associated with
related diversification are primarily that the company or institution deludes itself that it knows
how to manage the new business area. A classic example was General Foods ill-fated
diversification into the restaurant business with its purchase of Burger Chef. The difficulty arose
because rather than being another food company, Burger Chef was a servicebased business that
required completely different skills.
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A niche market refers to a group of potential customers with similar characteristics and similar
interest towards a particular product or service. Marketing niche strategy identifies these similar
needs to create a niche market from a potential market segment.
The advantage of launching or promoting a product for a niche market is the ease with
which the potential customers can be identified and targeted. It reduces considerably the
expenditure on promotion and launch activities.
The marketers divide the potential market segment into niche markets such as market for second
hand cars, wedding cakes, etc. For instance, Ford manufactures Ferrari and Austin Martin for the
niche segment of high rich class.
Sometimes the expected niche markets turn out to be mass markets owing to the huge demand
for the product or service as in the case of Apple when it launched its PC in early 1980s. The niche
market of PCs became a mass market with subsets such as educational PCs.
One disadvantage of niche marketing is its limited potential which is soon saturated. In such a
case, the marketer has to develop or produce a different product to satisfy the new needs of the
market.
Niche market is recognized as a type of focus strategy in which the manufacturer focuses his
attention on satisfying the needs of a selected target market. When products cannot be
customized to individual needs, marketing niche strategy is adopted.
Cultural and social differences in a community of potential customers lead to the development
of niche markets to satisfy the different needs of different groups and make the changes to the
product or service. Exclusive rights such as patents, brand.

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Trademarks, etc also result in the formation of niche market where the manufacturer enjoys total
control over the niche market due to his differentiated product or service. Delivery channels are
another factor leading to the creation of niche markets.
Marketing niche strategy is an important tool to sustain competitive advantage. It can be
achieved through identifying a market segment with similar needs and conducting a market
research to check the feasibility of the market segment.
The next step is to achieve a dominion over competitors by the means of patents, trademarks or
brands. Inventory suppliers need to be identified and delivery channels need to be selected.
Promotion and advertising play a major role in creating competitive advantage.
Promotion plan need s to be laid down and implemented effectively to get the desired results.
Monitoring the niche market is essential to find out the status of competition and the level of
saturation of consumers needs.
My fashion background is as the VP of Operations for a handbag production and marketing
company. My responsibilities include the inception and monitoring of marketing programs for
independent designers who may have a few seasons under their belts, have some solid and
sellable designs, and who actually have funding.
While working with these clients, we have noticed that it doesn't matter how cushy the funding,
every independent designer that we work with initially wants to market their designs to everyone
under the sun...regardless of who really would benefit from their particular designs. They have
this overwhelming desire to cast a net over as many customers they can find.
When I ask them to describe their target customer, most of our clients will nearly invariably say
something along the lines of, "I'm focusing on women between the ages of 14 and 65 who make
any amount of money and who like the look of a high-fashion bag." Keep in mind also that the
handbag designs we usually manufacture are in the better-to-high-end echelon, sold at
Nordstrom's or Nieman's (and the like) with an MSRP of around $400 or more. But for some
reason, some designers are convinced that their handbag is right for every woman.
Say, for example, that in order to entice people to your shopping cart website, you send out a
postcard. Let's also say that you rent a mailing list of all the women that fall into the three
qualification categories I listed above. Can you imagine how big that list could be? And what
about the printing and postage costs involved in sending a postcard out to such a large list?
A rule of thumb in marketing plans for an advertising/marketing budget is 10 percent of gross
sales. So how much would it cost to send out a postcard to roughly 50 percent of the population
of the United States? If following your marketing plan means that you can't spend more than 10
percent of gross sales, how many bags would a designer have to sell in order to meet profit
goals? What number represents 10 percent of YOUR sales? And there is a distinct likelihood that
the majority of the list will just trash the postcard because what you're selling doesn't interest that
recipient. What a huge waste of money and resources!

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This is why email marketing is just the thing for independent fashion designers of all stripes. For
just a fraction of a traditional direct-mail campaign, you can send out an email to hundreds, even
thousands of people. Even better is that most email marketing providers provide reporting that
shows you exactly who opened your email, what links they clicked, whether their email
"bounced" (proved to be a "dead" email), and even how many times they visited your main site.
Still better is that you could conceivably send out a "combo target email" with several different
links to dedicated web pages for different products, and you can discover who clicked on which
link. You could "segment" your list in this way and send each person an offer that they'd be more
likely to take based on their purchasing habits. Cool, right?
However, marketing to a niche makes much better sense in the long run, and incidentally, your
niche is not what YOU do, but rather, who you're targeting with your product. The problem with
many handbag designers, and many fashion designers in general, is that they often say, "my
niche is designing couture-quality, fashion-forward handbags for today's woman." This kind of
statement completely ignores what is really important: how like-minded people congregate and
not just demographics alone.
Obviously you want people to be able to afford your goods. But you will make the most money
from people who are "into" something you offer. You want those groups of highly selective
handbag buyers, for example, who when they see each other carrying that special, exclusive
handbag, scream excitedly, "ohmigodyou'reintogrysontoo!!!" Or something similar. Have you
ever seen anybody get crazy like that over a Coach bag? Not that Coach is a bad bag, but they're
everywhere now!
My particular "handbag addiction" is the Francesco Biasia line. Every time I see someone else
carry a Biasia, I get excited and rush over with an excited "oh my god" to compare bags.
It's this interaction, this instant bonding moment, upon which you want to capitalize. But how do
you know you've stumbled across the right niche? They should have three basic characteristics:
* First, they're lacking something that you can fulfill
* Second, you can find them
* Third, there are enough of them to meet your needs
The best tool I know of to capitalize on a niche is a pay-per-click/search engine optimization
campaign. These techniques will actually drive the right traffic to your website. I'll write more
about that "oh my god" effect, or psychographics, and how to reach them using these internet
marketing techniques, in next week's issue. Stay tuned!

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SPECIALIST CAN MAKE MORE MONEY THAN GENERALIST

We have all heard the saying: jack of all trades, master of none. You should ask yourself if
your company is a jack of all trades targeting everyone and being known for everything. What is
your expertise? Do you have a niche market that you specialize in?
Who is your ideal client? How do you find them? Do you serve them better than anyone else on
the market?
Most times especially when we are starting out we see everyone as a client or customer and
forget to specialize in what we know best. The notion of finding a niche market or specializing in
what we do may scare us because we believe that we are minimizing the number of people we
may sell to. In reality our market or clients are the people that are most inclined to buy our
services or products.
It is a fallacy to believe that you are limiting your market and chances of success by niche
marketing. Yes that market may be smaller but when you decide to niche you are deciding to
service an under served market and you can make yourself an authority and an expert and build
loyalty amongst your clients, get referrals and repeat business.
One of the advantages of niche marketing is that it forces you (or it will force you) to research
the market and develop a relationship with your clients. Once you understand your clients: where
they sleep, eat or spend their time online you will be able to market to them effectively in a way
that grabs their attention as opposed to marketing to the masses and hoping to connect with
someone.
Most businesses have limited resources; the difference between those that succeed and those that
do not is the way that they use resources. If you are a small travel agent dealing with flights
going to Asia are you going to market to everyone in your state even though you know that 75%
of the general population is not interested in going to Asia?
No, you would do a market segmentation and see who is more likely to fly to Asia: business
people, students, and people with family ties to Asia. Once you have done this you can even
segment the market further and decide which will be the easiest group for you to reach based on
a number of factors: resources, geography etc.
If you target everyone in the general population you are more likely to spend more money and
more time before you find the people you are looking for.
Of course finding your niche requires some market research which may take time. The most
successful entrepreneurs do not just spend money on marketing or operations: every dollar spent
has to have an impact on the bottom line and should be trackable (return on investment). So if
you are marketing to everyone and spending money on 5 or 6 different channels to reach your
clients, you should know how much revenue or expected revenue comes from those channels.

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a maker of alternative street wear, has been successful in establishing itself as a young brand in the
sports and skateboarding apparel market. Switch Skateboarding Magazine describes Dirtbag Clothing as
the gear that makes a different statement.
With its catchphrase Wear it till it stinks! Dirtbag Clothing is able to successfully target their market
and create a clear profile for their clothing line. As one of its young founders Douglas Canning says, At
Dirtbag were selling an attitude. Our philosophy is quite simple, do what you want and dont feel like
you have to conform.

The Birth of Dirtbag Clothing

Douglas Canning, 32 and partner John Alves, 32, started Dirtbag Clothing in 1996 when they were in their
final year as film majors at San Francisco State University. Doug Whitsitt, 36, later joined them as a
partner.
The idea for Dirtbag started as a design experiment for Canning. Since I was 21, I knew I wasnt cut out
to work for anyone else, Canning says. He stumbled across the original Dirtbag design in 1995. After
seeing it for the first time I knew I could do well with it, Canning recalls. Its the only article of clothing I
know of that gets a reaction from people. After 20 or so people asked me where they could buy a shirt, I
knew the whole Dirtbag concept had potential.
Without any business education or prior entrepreneurial experience, Canning characterizes the process of
starting Dirtbag Clothing as a baptism by fire.
I had some sales experience in the mountain bike industry but absolutely zero business experience,
Canning says. Nonetheless, he and his partners knew the market well and the best market research
came from the people on the street reacting to their products.
The Web as the Starting Point Dirtbag Clothing started as an Internet pure play business, selling their
products mainly on their Website http://www.dirtbagclothing.com Canning and his partners junked their
initial idea of reaching the skate, surf and boutique stores by printing a catalog, and instead decided to
sell primarily on the Web. Their decision saved them thousands of dollars in start-up expenses. The
young entrepreneurs strategy was to leverage the Web for starting their business. They knew that the
Web could offer them distinct advantages over other sales and distribution medium: lower overhead
costs, the ability to reach a wide audience and its tremendous marketing potential.

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As Canning describes it: The Internet has leveled the playing field to the point where pretty much
anybody with a solid concept can launch a business and have an internet presence without investing
thousands of dollars.
A website is a virtual store, and if its designed well it can be just as effective as a brick and mortar
storefront. Right now we get 2,000 visitors per day to dirtbagclothing.com; how many small boutiques get
that kind of foot traffic? In my opinion the Internet is by far the best tool for the modern day Entrepreneur.
Another advantage of the Internet is that with a well designed website, small companies can look much
bigger than they are. Its all about trust and perception.
Dirtbagclothing.com was born online in 1996, and has since gone through several design changes to
improve product presentation and overall customer experience. Canning and his buddies were then
working on the business part-time while keeping their day jobs to support themselves and their new
venture.
As Canning recalls those pivotal decisions of launching a web site once the business idea was hatched:
We launched a basic site in 1996; since then it has gone through 4 or 5 upgrades. The first site was up
and running within a few months. Yes, it was a quick decision. We wanted to get our name out there as
soon as possible. Fortunately we knew a lot of web savvy designers who helped us with the overall
design of the website at a very reasonable price.

Start-Up Challenges and Setbacks

Like many other businesses, DirtBag.com experienced its own share of setbacks and difficulties. The
design and manufacturing of their clothing products proved to be a challenge, but one that they overcame
through networking. Were not fashion guys, Canning admits, so we worked with a lot of designers who
helped us expand into different products. Once the designs were done the next challenge was finding the
cash to go into production.
Knowing the right contacts also helped find the manufacturer who will create their products. Canning
says, I had worked with a screen printer while working for a mountain bike company and developed a
good relationship with him that carried over into the Dirtbag venture.
The young entrepreneurs, however, had to endure inefficiencies in their manufacturing process. In the
early days we would just order only what we really needed which was not the most cost effective route to
take, says Canning; but we didnt have much of a choice. As sales have increased we have managed to
lower our production costs significantly and have increased our margins by 20-25% across the board.
After four years of trying to make it, the partners found a ray of hope in 2000 when an investor agreed to
help them. Plans went overdrive: new products were planned, new marketing approaches were
developed, and Canning even quit his day job to work full-time on Dirtbag. Alas, the deal with the investor
went south. Dirtbag Clothing ended up holding an empty bag. Undeterred, the young entrepreneurs
pushed through with their plans. They borrowed $30,000 from relatives and another $25,000 from credit
cards. Thank God for Visa, MasterCard and American Express, says Canning. Without them Id
probably still be working at my old job!

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The risks paid off: Dirtbag.com has experienced steady but gradual growth since 2000. Brands are not
built over night, says Canning. When you have limited resources you have to be creative, patient and
persistent all at the same time.

Marketing a Clothing Line

When their products were launched, the market reception was lukewarm at best. Canning recalls those
days: The reaction was not as warm as we expected. We liked the Dirtbag concept (obviously) and we
had a lot of avid supporters, but competition in the clothing industry is fierce.
Even dealers and buyers for clothing boutiques initially shunted them out. Canning recalls, Dealers for
the most part are very conservative when it comes to taking on a new brand. We got a lot of NO
THANKS. There are a ton of brands and only a limited amount of shelf space. The rejection did not stop
Canning and his partners.
Through dogged persistence and perseverance, he began collecting names and emails of contacts and
buyers at prospective distributors. He scoured the web sites of the retailers and collected contact
information from trade shows. He then contacted them via email, inviting them to visit the website. Many
did, and some even ended in accounts.
Slowly, the market warmed up to Dirtbag.com as the company built a name for itself on the Internet and at
San Francisco Bay Area clothing stores. Canning opines, No matter what business youre in, it takes time
to create and develop brand awareness. If nobody knows about you, they cant buy your products."
They worked on carefully reaching their audience using strategies that will not empty out their pockets.
As a small company with very little cash, we relied heavily on band sponsorships, email campaigns,
search engine optimization and word of mouth to create brand awareness. Public relations is also a key
element of their marketing strategy, having been featured in magazines such as Entrepreneur and named
as one of the awardees of the Annual Inc Magazine Web Awards.
Band sponsorships are a core element of Dirt Bag Clothing marketing strategies, with the company
sponsoring and actively promoting a number of musical acts. Canning contacted independent record
labels of bands that might appeal to their target audience. In return, members of the sponsored band
wear only Dirtbag clothing at its public gigs and verbally mentions the company at every show they
perform. Additionally, the band receives discounted clothing. Some of bands they are currently sponsoring
as listed in their second website DirtBagMusic.com include Soulfly, Spineshank and others.
When asked how did this strategy come about, Canning explains: Very simple. We had no money and
plenty of tee shirts. Kids in our target market listen to music. Instead of taking out full page ads in
skate/music magazines we decided to bypass that step and go right to the core of the audience we were
trying to reach.
This strategy has allowed us to reach a greater number of people that are connected to the music scene.
If a kid that listens to Punk or Metal, theres a good chance he skates or is involved in some kind of
extreme sport. Music is the common denominator. Why go after a specific market when you can have it all
through music?

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Guerilla Marketing and persistence are also key ingredients to Dirtbags success. Offline, they market
their products by using stickers, postcards, banners and anything guerilla! Online, they are big on
search engine optimization, email marketing, pay per click, banner exchanges, contests.
Despite their initial setback with regards to dealers, they remain aggressive in getting their products in the
shelf of sports shops and clothing boutiques. To ensure that the dealers carry their clothing label, Canning
describes their approach as such: If a shop were somewhat interested I would give them specific
examples of other well-known stores that have been successful with our product. We also offer free
shipping on first time orders. I would also let them know that were a unique brand that not everyone has,
and convince them that sometimes a lack of brand awareness isnt such a bad thing and that kids today
are looking for something new.
Now, DirtBag Clothings products sell itself. Canning says of their success, The people that wear Dirtbag
like the fact that were a small company. We dont take out full-page ads in skate and music magazines or
pay people to wear our product. People wear Dirtbag because they want to, not because we tell them
they should.

The Road Ahead

In 2004, DirtBag Clothing is projected to reach $1.4 million in sales.
Canning attributes their success to gradual growth, managing inventory, product line expansion and
keeping customers happy. Growth is a good thing, but if you grow too fast and over extend it can ruin your
business.
In 2004 we will be working with more than a dozen multi-platinum selling bands, outfitting these bands for
their tours will be our primary focus for marketing in 2004. In addition to the bands we will also be
launching our brand in Canada, Europe and Japan. Were in 70 shops in the United States and we hope
to add another 50 to that list. On the web front, were going to be doing a complete website overhaul with
new graphics, shopping cart and back end.
For other start-up entrepreneurs, Canning shares the following lessons:
1. Get everything in writing. Everything!
2. If something seems to good to be true, run away immediately.
3. Dont have a business partner as a roommate.
4. Dont get frustrated if you dont make a million in your first year.
5. Prepare to be broke for at least 2 years.
6. Date women/men who dont mind paying for dinner.
7. Network with other successful people who have started their own businesses and ask them a lot
of questions.
8. Never think you can do everything on your own

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The lingerie market in India

The overall innerwear market (excluding kids) in India was worth Rs. 1,191,300 lacs in CY 2009.
It has grown at a Compounded Annual Growth Rate (CAGR) of 15.8 % over the last four years.
The growth can be attributed to the rising disposable incomes, growing consumer class and
advent of international brands in the Indian markets.
In volume terms, the mens innerwear market constitutes 48 % of the total innerwear market in
India. The share has remained range bound over the last four years. The women lingerie
segment holds a 52 % share. In value terms, the women lingerie segment enjoys 66 % share of
the total lingerie market. Larger value share and a smaller volume share depict higher Average
Selling Price (ASP) as compared to the mens innerwear market.
In value terms the lingerie industry in India was worth Rs 7, 89,700 Lacs in CY2009. It has
grown at a robust 16.8 % over the last four years (2006-09). The growth can be attributed to the
rising disposable income and growing preference for lifestyle products. Over the last decade
lingerie has grown from an optional part of the wardrobe to essential clothing for women. It
constituted 5.1 % of the total Indian apparel market and 15.8 % of the overall women apparel
market during 2009. In volume terms the lingerie industry grew at a rate of 9.4 % over the last
four years. The lingerie sales grew from 4,980 Lacs pieces in 2006 to 6,520 Lacs pieces in
2009. In volume terms it constitutes 9.4 % of the overall apparel market and 31.9 % of the
women apparel market.
The lingerie market grew at a faster pace in terms of value as compared to volumes during the
2006-2009 period. This signifies a jump in the average selling price which grew from ` 100 in
2006 to `121 in 2009. It grew at a Compounded Annual Growth Rate (CAGR) of 6.7 % during
the same period.
The lingerie industry in India is characterized by a high degree of fragmentation with almost twothird of the market controlled by the unbranded and unorganized regional players and the
balance one-third share goes to the few big organized and branded players. The advent of
some international brands in the Indian market place has brought about some realignment in the
fragmented lingerie market. The companies have started advertising boldly through
advertisements, fashion shows etc., to catch up with the consumers to understand their
preferences.
Segment-wise lingerie market - The lingerie market in India can be divided into five segments
based on the price points at which they sell in the market. They are classified in super-premium,
premium, mid-market and economy & low-market segment. Approximately, 75 % of the market
share is held by the mid-market and economy segment, in both, value and volume terms. The
super-premium and premium segments are relatively smaller but fast-growing segments. In
volume terms, the economy segment accounts for the maximum share in the lingerie market.
The volume-wise share of different segments has remained more or less stable over the last
four years. All segments except the low market segment have grown in the volume terms over
the last four years. The maximum growth in volume terms was experienced by the superpremium segment followed by the premium segment. This indicates the growing penetration
level in these segments. The super-premium and premium segments grew at a CAGR of 18.9
and 16.6 % respectively. This can be attributed to the surge in international brands entering
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India, rising income levels, changing demographics, growing brand awareness and the
willingness amongst the people to spend on lifestyle products. The key brands in the premium
and super-premium category are Marks & Spencer, Triumph, Enamor, Lovable and La Senza.
The key brands in the economy and mid-segment are Groversons, Body, Bodyline, Daisy Dee
and Teenager.
In value terms, the mid-market segment is the largest followed by economy and super-premium
and premium segments. Low market constitutes only 6.5 % of the total lingerie market.
Approximately, 78 % of the market share is held by the mid-market and economy segments.
This segment is majorly dominated by unbranded regional players. Therefore, there lies
immense potential for the market participants to launch products in these categories to grab the
market share and create a better brand recall.
The average selling price (ASP) of lingerie in India varies from Rs. 37 per piece to Rs.1, 029 per
piece. The ASP of the super-premium segment has grown at the fastest pace followed by the
premium segment. The ASP in the super- premium and premium segment grew at a CAGR of
14.5 % and 8.9 %, respectively, over the last four years. This kind of a growth can be attributed
to the entry of global brands in India, rising percentage of organised retail and the rising brand
consciousness amongst the consumers. The growth in the ASP of the lower segment remained
at a meager 2.9 %. This indicates that the lower segment is a price-sensitive market. The ASP
in the mid-market and economy segment grew at 5.2 % and 4 % respectively.
The brand loyalty factor is the highest amongst the premium and super-premium categories. It
decreases as we move down the ladder. According to Images Business of Fashion Magazine,
October 2009 issue, Lovable is amongst the top three preferred brands in womens innerwear in
India.
The lingerie industry in India is expected to grow at a CAGR of 18.3 % over the period 20092014. It is currently estimated at Rs. 7,89,800 Lacs and is expected to be worth Rs. 18,32,460
Lacs in 2014. This growth would be led by the super-premium, premium and mid-market
segment.
The super-premium and premium segment contributed 15.8 % to the total lingerie market in
2009. This share is expected to grow to approximately 28 % by 2014. This can primarily be
attributed to the advent of international brands in India, growing brand awareness and brand
loyalty amongst the Indian consumer. Mid-market segment is the largest segment of the lingerie
market and is expected to remain the largest over the next five years. It currently contributes 43
% (2009) to the total lingerie market. This share is expected to increase to 46.3 % in 2014. This
segment is expected to grow at a CAGR of approximately 20 % over the next five years. The
growth in this segment can be attributed to the growing urbanization and increasing number of
working women. On the other hand, the economy and low segments are expected to grow at a
pace slower than the overall lingerie market, thereby, losing its share in the overall pie.
The key factors influencing the choice of the consumers are comfort, price, brand and durability.
Comfort plays a key role in the choice of the consumers followed by price and brand name.
Consumer Preferences Size is the most crucial component in the lingerie market. The best
selling size is 90 cm followed by 85 cm. In brassieres type, regular full cup are more in demand,
followed by the seamless and strapless bra categories. Colour- wise, white seems to be in more
demand followed by pink, black and peach. When it comes to fabric, sales are led by cotton
brassieres followed by cotton lace and cotton Lycra.
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Overview of apparel & textile industry

In 2009, world apparel production stood at US$140 billion, with 71% of production
accounted for by Asian countries. The developed nations/regions such as US and
European Union (EU) accounted for 11% and 14% of global production respectively.
Being a matured industry, growth rate of the Global Textile and Apparel industry is in
sync with the growth rate in global GDP. Of the total apparel retail market valued at
approximately US$500 billion in 2009, the developed nations/regions like US and EU
accounted for 33% and 30% respectively.
The Indian textile and apparel industry is estimated to be worth Rs. 2,700 billion in fiscal
year 2010. It has been estimated on the basis of industry interactions. Approximately
65% of the total textile and apparel production (wholesale price level) is consumed
domestically. Indias domestic textiles and apparel consumption is estimated at Rs.
1,750 billion (wholesale price level), of which apparels account for approximately 71%.
India exported US$20 billion worth of textiles and apparel of which 45% are apparel
exports.
The textile and apparel industry is one of the largest and the most important sectors in
the Indian economy in terms of output, foreign exchange earnings and employment. It
contributes approximately 14% to Indias industrial production, 4% to the countrys
GDP and 17% to the countrys export earnings. It provides direct employment to over 35
million people and is the second largest provider of employment after the agricultural
sector. Thus the development of this sector has an overall impact on the economy. The
Indian textile and apparel industry contributes approximately 4% to the global textile and
apparel market. Since the textile industry has such economic importance, it has always
attracted the Governments attention. Therefore, the Government has introduced
policies such as the Technology Upgradation Fund Scheme (TUFS), Scheme for
Integrated Textile Parks (SITP), low excise duty, high import duty (to discourage
imports) and National Textile Policy to develop the textile sector.
Indian Apparel Industry
Estimates say (based on industry interactions) that the Indian apparel market grew at a
CAGR of 6.5% from Rs. 1,225 billion in fiscal year 2005 to Rs. 1,675 billion in fiscal year
2010 (wholesale level). The Indian apparel market comprises domestic apparel
consumption and exports. The domestic market is estimated to be worth Rs. 1,250
billion in fiscal year 2010 (at wholesale level). Spending on domestic retail apparel has
grown at a high rate of approximately 1314%. The apparel market size at the retail
level is estimated at Rs. 2,000 billion in fiscal year 2010. The retail purchases on
apparels is expected to double to approximately Rs. 4,000 billion by fiscal year 2015, a
CAGR of approximately 15%. Factors expected to contribute to the growth of the Indian
apparel industry include:
Rising levels of disposable income;
Growing preference for ready-to-wear apparels;
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 Increasing penetration of organised retail;

Changing consumer habits;
Increasing trend towards urbanization; and
A comparatively younger populace.

Often when we think of fashion we think first of catwalk models and the magazines which feature
them, then of the more modest versions of the clothes we see there which are sold in high street
chain stores. But the fashion industry isn't just one entity with one direction. It's split into numerous
subsections with rules all their own.
Aiming your designs at a niche market can make it much easier to get noticed when you start out. It
can help you to focus and it can be a good way to take advantage of your existing familiarity with a
particular group. On the other hand, it can limit your ability to expand and it may make it more
difficult for you to get your work taken seriously in the wider marketplace. What's more, niche
markets are often crowded - your designs will need to be really good in order to compete.

Types of Niche Market

Most people who enter a niche marketplace as designers do so because they already have an
interest in its customers. However, it's important to understand that knowing the customers is not the
same as knowing the industry. With each type of market, there are specific factors to consider.

Industrial Clothing - People care about what they wear at work, even if they have to wear
a uniform or if their clothing has to be designed specially to protect them from industrial
hazards. Managers are always on the lookout for industrial clothing which will be more

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practical to wear or which will make a better impression on business clients. However, you'll
often find that one or two big companies control the whole marketplace and that it's very
difficult to compete with them.

Hobby Clothing - There are all kinds of hobbies and sports for which specialist gear is
essential. Often this will need to meet strict safety standards, so make sure you know your
stuff. Customers in this group often follow fashion closely and are excited by new fabrics,
colours and designs, but they also tend to be conservative and to depend a lot on prior
experience or word-of-mouth recommendations.

Subculture Clothing - This can range from highly noticeable items like gothic or rave

wear to fashions aimed at less visible groups such as elderly people who have retained the
cultivated tastes of their youth. Generally speaking, the more fashionable the group, the
more designers are competing to serve it. Some may be doing it as a hobby and making
very little profit, making them difficult to compete with.
Despite these problems, there can be big rewards involved in targeting a niche marketplace.
If you are successful, it's much easier to remain that way than in the more fickle world of
mainstream fashion. Niche marketing won't make you a star and it's unlikely to make you a
millionaire, but it can be an effective way to swiftly reach a point where you're generating a
steady income.

Niche Markets Need Strong Ideas

If there's one rule in niche fashion marketing, it's that there's no room for copycats. Many
people are drawn to this type of work because they admire existing designs, but attempting
to recreate them won't get you anywhere - customers will stick with what they know, even if
your work is a little cheaper. In the mainstream market you can adapt high fashion styles and
get away with it. In niche marketing it's much more important for you to find your own voice.
Customers are often hungry for new styles, so innovative work can lead to quick success.
High quality work is also more important in a niche market where word of mouth is a much
more significant factor. This may seem like a burden, but on the other hand it means that
good work will quickly get you noticed. Niche markets reward talent and hard work far more
consistently than the mainstream market does. They may limit your options as a designer but
they'll present you with strong opportunities as a business.

Succeeding in the niche apparel market

Clothing and apparel is a cutthroat industry. For small businesses to survive and thrive
they need to create products that are emotionalized, authentic and, above all,
differentiated. These businesses must be able to differentiate themselves from their direct
competitors and establish themselves in customers minds.

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Abdul Jameel, with his wife Raiza Jameel as the fashion designer, started an apparel
business in 1988 with one sewing machine, which later became known as R&J Apparels Pvt
Ltd.
Now after 16 years of specializing in ladies wear, they have 150 sewing machines, 250
employees, and most of all, they have brands such as Jezza, She-D, Vatsa and Lisi that are
renowned for quality in the fashion market.
Gayathri Jayadevan, Business Development Specialist at the International Labour
Organization - SIYB Program, who has been writing this series on small business
development, spoke to Abdul Jameel to find out more about how to meet the changing
demands in the fashion industry.
The birth of R&J Apparels
When I was a training manager at a textiles shop in Badulla, female customers would
request particular designs to be custom made for them in their choice of selected fabrics.
This emphasized the existing need to keep up in the fashion industry, and after speaking to
20 or so people, I knew designing my own clothes had a potential.
Start-up challenges and setbacks
Like many other businesses, R&J experienced its own share of setbacks and difficulties. In
the start-up phase, the staff expected better benefits which we could not afford, and there
was no recognition or incentive from the government for growth-oriented entrepreneurs in
the domestic apparel industry.
Due to these reasons in the early days, though we had potential for more variety, our
product line was limited. As sales increased, we managed to lower our production costs
significantly, increase our margins by 20-25% across the board and expand to a wide range
of product line.
Marketing a clothing line
Though difficult it may be for small businesses (limited resources and all) - success comes
to those who take risks and are able to communicate that it offers something new, fresh and
innovative. Most of all, they must create a brand R&J Apparels, has been successful in
establishing itself as a young brand in the ladies wear apparel market with the labels Jezza,
She-D, Vatsa and Lisi which are well recognized for office, exclusive and casual wear.
These are now widely available in maor stores such as No Limits, Kandy Tex in Wattala,
Tilakawardane Textiles in Kiribathgoda and Prasad Tex in Piliyandala. The initial reaction of
dealers and buyers when it comes to taking on a new brand was very conservative. We got
a lot of NO THANKS.
Through dogged persistence and perseverance, we worked on carefully reaching our
audience using strategies that will not empty out their pockets. We relied heavily on fashion
shows, search engine optimization, and word of mouth to create brand awareness.
I participated in the Expand Your Business training of the ILO through Start and Improve
Your Business Association. Among many practical outcomes, the situational analysis made
me think about where the business was and how to map out future marketing opportunities.
Road ahead
In 2010, R&J is projected to capture 10 per cent of the market share for ladies wear. We

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want to continue to design quality ladies wear customizing to the taste and needs of lower
to middle class Sri Lankan women. By increasing the production capacity and the product
range, we are aiming to increase our distribution from 175 dealers at present to 1000
dealers island-wide in 5 years time.
For other growth-oriented entrepreneurs, Jameel shares the following lessons:
* Recruit and work with people who have the can do attitude, are passionate, and creative.
* All managers should lead the organization with clear direction in the short term and long
run.
* In order to survive in the fashion industry, anticipate about new trends and competitors,
be proactive and respond well.
Jameel can be contacted at
abduljam@sltnet.lk (www.jezzafashions.com) while the writer can be contacted at
gj@siyblanka.com (www.siyblanka.com).

Niche Marketing: By customers, to customers, for customers!

It is adapted according to the needs, wishes and expectations of small, precisely

defined groups of individuals. A form of Market Segmentation but meant only for a
very small segment. The one big benefit in this is that it is extremely cost-effective.
Other is it also involve low-risk as compared to other strategies. There are three
golden rules for it which will definitely boost business growth as: 1) Satisfy unique
needs by customers, Position right things to customers, and Always test-market for
customers.

Satisfy unique needs by customers

The benefits promise must have special appeal to the market in niche strategy. New and
compelling at a time! Identify the unique needs of potential audience and look for ways to tailor
product or service accordingly by customers mind test.Blue Ocean Strategy

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Start by considering all the product or service variations one can might offer. When it comes to
marketing soap, for example, not much has changed over the years. But suppose one as a soap
maker and invented a new brand to gently remove dandruff from hairs. That is not done by any
soap maker earlier so one can be pioneer by offering this in soap line.

Position right things to customers

When approaching a new market niche, it's essential to speak their language. In other words,
one should understand the market's "hot buttons" and be prepared to communicate with the
target group as an understanding member not as an outsider. In new niche market it's vital to
understand its members' key issues and how they prefer to communicate with companies. For
example, suppose a business that markets leather goods primarily to men through a Web site
decides to target working women. Like men working women appreciate the convenience of
shopping on the Web but they expect more content so that they can comprehensively evaluate
the brands and the company behind them. To successfully increase sales from the new niche, the
Web marketer would need to change the way it communicates with them by expanding its site
along with revising its marketing message.

Always test-market for customers

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Before moving ahead, assess the direct competitors one will find in the new market niche and
determine how it will position against them. For an overview, it's best to conduct a competitive
analysis by reviewing competitors' ads, brochures and Web sites, looking for their key selling
points, along with pricing, delivery and other service

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