Friday, December 14, 2007

It’s accepted that most new brands fail. They target oceanic markets, launch titanic campaigns, and then sink without a trace.

By contrast, one of the most common putdowns in business is “That’s a niche market”. Translation: puny, fringe, of limited potential. Think back a few years before the tech bubble burst- you can imagine a declaration like this resounding in a conference room full of Aeron chairs: “Search is a niche opportunity; what we really need to focus on is becoming a portal, a robust destination site where users spend a lot of time and can be served dozens of targeted banner ads”. Good thing Google wasn’t buying it.

Sometimes a niche is not a niche. Sometimes a niche is not the fringe of the market, but the bullseye, the lynchpin, the modest manifestation of a huge underlying opportunity. Sometimes a niche is merely the tip of the iceberg.

Let’s examine some successful brands through these lenses:

1. The Rise of the Power Niche. How leverage, not reach, is the key to growth….
2. Authenticity is Currency. Lead with the brand truth and others will follow…
3. Passion Plays Well. Emotion and belief motivates employees, customers…and consumers.
4. Aim for the Icebergs. What lies underneath can change the game, and scuttle the competition.

1. The Rise of the Power Niche

When you hear someone say “They’ve found their niche”, it’s an incredibly positive statement. It implies the achievement of stability, productivity, and personal growth.

The Power Niche is a business segment that over time becomes strong enough to support rapid growth. Depth of connection, rather than breadth of reach, is the key to the Power Niche. At its core are true believers who evangelize the virtues of the brand until they begin to sway the mainstream to their point of view. Competitors may take notice, and maybe take action, but many times the upstart is dug in deep and can’t be moved off its position. When conditions become optimal, the business takes off and grows to a critical mass where it exerts powerful leverage from it's deeply rooted base. This tilts the playing field to huge advantage, drawing sales at a rapidly expanding rate, and exposing the underlying weakness of the competition. In time, the brand can become the center of its own economic ecosystem, dictating the dynamics of the market and forcing every competitor to react to its moves.

The shining example of the Power Niche is Google. Back when portals, aggregation of eyeballs, and home pages crammed with content were all the rage in the internet space, Google delivered a clean white page featuring a single search box. When the smart money was betting on the increasing reach of the web and its ability to deliver massive amounts of real-time content, Google countered by refining its search technology and finding a way to monetize individual results. What proved out was that the power of the web is not in the amount of information, but the ability to get one piece of information you need very quickly.

2. Authenticity is Currency

“Poseur” is probably at the top of the list of disparaging accusations you can make against a person or brand in today’s world. That label means instant death. On the other hand, if your brand is anointed as “the real deal”, you are on the road to success because you have a strong platform on which to stand.

The lesson here is simple. Authenticity can’t be bought – you either have it or you don’t. If you do have it, if you’ve earned it, you have something incredibly powerful – a story, a position, a mission, a reason for someone to believe…and buy. In the all-knowing media society, if your story is manufactured, prettied-up, or deliberately fuzzy, you are dead in the water.

In the category of “So Authentic it Hurts” we have a brand like Patagonia. They have a headquarters office that empties out when the surfs up in Ventura.  An owner who has never been interested in maximizing the business.  A financial mandate that annually allocates 1% of revenue to environmental causes. Patagonia is a profitable company that eschews explosive growth and rebuffs potential suitors because they are convinced the mission of the brand won’t survive an acquisition. Authenticity is non-transferable. That’s something you can believe in, and buy into, over and over again.

3. Passion Plays Well

Passionate people usually have a tough go in traditional companies. They make waves, create conflict, challenge the status quo. Passionate entrepreneurs build passion-based brands. They inspire passion in others.  These disciples spread the word to the wider world. Cult brand status can ensue. In the old world, “cult brand” meant small brand.   Not today.

Apple was the world’s largest cult brand for a long time. Now it’s on track to become one of the world’s biggest brands. It started with the two Steves’ passionate devotion to their products, and has ended up being the one Steve’s lifelong mission to create products that are “insanely great”. While business dominated the digital world he had no chance, was pushed out, and thought to be washed up.

Turned out he was just ahead of his time. When his passion for product and devotion to design synched up with the global ascendance of digital consumer products, Apple became a supremely powerful force. It took almost twenty years for the world to finally say “We feel you Steve”.  What was the cult following is now the core constituency of a massive business in a marketplace Jobs envisioned many years ago.

4. Aim for the Icebergs

As a seafaring strategy “aim for the icebergs” is crazy, but for marketers it isn’t. The power of the analogy lies in the belief that many times the largest part of an opportunity is hidden in the chaos of the global market. The small indicators of a new consumer trend or behavior are visible, but the potential customer is submerged in the oceans of commerce and communication washing over them. Many brands have run aground on these little bergs, and discovered a vast opportunity they would have never found in the highly trafficked shipping lanes of everyday convention.

Here’s an example from the world of sporting goods. Throughout the seventies athletic footwear and apparel was dominated by the likes of adidas, Converse, Nike, Puma, etc who catered to men participating in traditional sports. In the early eighties Angel Martinez, working for a small brand called Reebok, came across fitness classes in school gyms and church basements that were teaching women a new way to get fit. At the time this activity was called dancercize or jazzercise. Most of it was derived from dance training, which pretty much guaranteed that men, and the companies catering to these men, would not participate.

Since most of the women were participating in running shoes, or even barefoot, Angel convinced Reebok to make some shoes for this activity, based on the design of the classic Capezio dance shoe combined with athletic shoe cushioning and a sole that wouldn’t mark the floor.  Soon the burgeoning health club industry took notice and began to offer their own classes because they saw this as a way to grow their customer base.  The activity was repackaged under the name "aerobics".   All the classes had instructors, so Reebok created the "Instructor Alliance" to offer deeply discounted shoes and professional support to market their products to this key constituency.  Soon women were clamoring to buy them so they could have the same equipment as their instructors. 

And so it began for Reebok. One instructor teaching 5 classes a week directly influenced at least 125 people. This experiential marketing grew the category exponentially.   Retailers carved out shelf space in their stores to serve the demand.  Meanwhile, the traditional athletic companies watched..and did nothing. To them it was a fad, not a real sport, something at which to thumb their collective noses. 

In less than eight years Reebok grew from a small company to over $1 billion in sales. To paraphrase Angel Martinez, “aerobics wasn’t about working out, it was about women”. Guess which gender buys 80% of the apparel and footwear sold in the world?  The old line companies watched Reebok vault to the number one overall market share by failing to recognize the beginning of the modern athletic footwear and apparel business.


It happens all the time now. The biggest companies in their respective industries get waylaid by committed, focused brands that dig in deep and pick off customers from the big guys. How did Vitamin Water stick it to the huge beverage companies? How did Burt’s Bees turn beeswax into a company for which Clorox will shell out almost a billion dollars? How did Under Armour, an underwear brand, become the fastest growing sports brand in the country, right under the noses of Nike, adidas, et al? What’s to be learned here?

Go deep. Plumb for depth rather than measure for breadth. Tap into people’s passions. Judo the competition by using their size against them. And don’t play in traffic. It’s a busy, messy, loud, and expensive marketplace of messages out there. In the end, you can’t “break through the clutter” as many traditional marketers will have you try; you should avoid the clutter completely. And keep an eye out for those little bergs along the way.