Aim for the Icebergs: How Niche Brands Become Great Brands

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

Ironically, one of the most common putdowns in business is “It’s a niche market”. Translation: puny, fringe, of limited potential.

But 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 Power Niche. How leverage, not reach, is the key to growth….
2. Authenticity is Currency.
3. Passion is essential.
4. Aim for the Icebergs: What lies underneath can change the game, and scuttle the competition.

1. The Power Niche

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

The Power Niche is a business segment that harbors the potential to become a platform strong enough to support rapid growth. Depth of connection, rather than breadth of reach, is the key. Its core customers are true believers who evangelize the virtues of a brand. If it remains committed to its customers, and evolves a scalable business model, over time conditions may become optimal for the business to take off. As it grows to a critical mass, it exerts powerful leverage from its deeply rooted base. Competitors may take notice, and maybe take action, but often the upstart is dug in deep and can’t be moved off its position. It begins to tilt the playing field to huge advantage, drawing sales at a rapidly expanding rate, and exposing the underlying weakness of the competition. In time, the niche 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 historic example of the Power Niche is Google. It all started with a clean white page featuring a single search box. While most were betting on the increasing reach of the web and its ability to deliver massive amounts of content, Google laser focused on search technology and finding a way to monetize the results.  The ubiquity of search, not the aggregation of content, bred the ever increasing power of Google. Think about it; When your brand becomes a verb in all languages, it’s probably a good sign.

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. On the other hand, if your brand is anointed as “the real deal”, you have a strong platform on which to stand. Authenticity can’t be conjured up or 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…to trust.... and to buy. In the all-knowing connected world, if your story is manufactured, prettied-up, or deliberately fuzzy, you are going to be 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 profitability of the business.  They are the poster child B Corporation with an institutionalized mandate to allocate 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 is essential.

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 anymore.

Apple was the world’s largest cult brand for a long time. Now it’s 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 mission to design and create products that are “insanely great”. But back when business dominated the digital world he had no chance... he 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 twenty years for the world to finally say “We feel you Steve”.  What was the cult following is now the massive business Jobs envisioned so 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. Small indicators of a new trend or behavior are visible, but these emerging opportunities are obscured in the vast oceans of traditional commerce and dense fog of digital media overload. Navigating by data analysis does not reveal these opportunities…only a willingness to explore, experiment, and innovate. Marketers typically focus on what has worked before, rather than seeking these uncharted depths. Adventurous brands are the only ones who run aground on these little    bergs, and sometimes discover a vast opportunity that they would have never found in the highly trafficked shipping lanes of everyday convention.

There are countless examples of this, but here’s an old school one from my own professional experience. Throughout the sixties and seventies athletic footwear and apparel was dominated by the likes of adidas, Converse, Nike, Puma, etc who catered only to men participating in traditional sports. In the eighties women who were being ignored by these companies began participating in fitness classes taught by instructors. The movements, and the music, were derived from dance training, which pretty much guaranteed that men, and the companies catering to these men, would not participate.

But 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".   A little brand called Reebok created shoes specifically for the activity, and an "Instructor Alliance" to offer deeply discounted shoes and professional support to this highly influential community.  Soon women were clamoring to buy them too.

And so it began for Reebok. One instructor teaching 5 classes a week directly influenced hundreds of 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. They viewed it was a fad.

In less than eight years Reebok grew from a small company to over $1 billion in sales. To paraphrase Angel Martinez from Reebok, “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.

Summary

It happens all the time. 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. 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.