Market Position
Your market position forms your approach to marketing. There are four basic positions: Leader, Challenger, Niche and Follower. Most small or local businesses are likely to be Niche or Follower. However, there may be some Leaders or Challengers.
Leaders
The market leader in any market is usually seen to be the business that provides the highest quality products in the greatest number. They seek to maintain their market position and their reputation.
Someone approaching a leader can be confident they are dealing with an established business and if something goes wrong it has the capacity to put it right. Leaders are the safe option and likely to be expensive.
They are likely to offer a standard product or service. If they turn over a lot of customers, the chances are they offer a “one size fits all” approach.
Challenger
These businesses are the closest competitors to Leaders and seek a share in their markets. The Challenger will try to produce either a higher quality product or service or else they will seek to undercut the Leader in price.
To get to where they want to be, the Challenger will compete with smaller businesses so they can get their customers and build a market share to challenge the Leader.
For many years Apple was the Challenger to Microsoft. I’m not sure which of these is the current Leader but how did Apple challenge Microsoft? They used design. Their computers were well-designed both in their appearance and their operating system. As Microsoft became bogged down with a system that under-performed, Apple thrived on learning from Microsoft and designing a robust system from the start. A third element to their success was identifying the type of device that appealed to people, their customers appreciated their latest models as trendy.
Microsoft found itself embedded with traditional users who couldn’t afford to change systems and people like me who simply use what they know, despite its limitations.
Niche
The niche market position is open to smaller businesses. It identifies a market too small to attract other businesses’ attention. They offer a high quality product or service specifically tailored to that market.
Their main marketing point is they know their market and so provide excellent service. When someone in their market encounters their marketing pitch, they know it is for them.
Because they are providing a bespoke service, tailored to their customer’s needs, these businesses can be expensive.
Followers
These are the pile it high, sell it cheap school of marketing. The idea is to copy the Leader but at low quality so that costs can be kept low. This can be a borderline dishonest approach and so it is important to keep an eye on reputation.
Whilst some people may stand back through fear of purchasing something substandard, most people will buy because they can afford to take a loss if it turns out to be substandard.
The problem with this approach is that it lacks a creative approach to business, seeking to emulate the success of others. Are there any circumstances where it can work?
I suppose some people use this approach to generate capital quickly so they can build a niche business.
It may be worth checking from time to time, which of these positions your business occupies. Given most small local businesses will be niche, this model is helpful not so much for self-diagnosis as helping us understand the market position of other businesses.
Have you experience of working in a market Leader or Challenger? How does it differ from working in a Niche market?