Niche strategy in practice - case studies

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How to start from a niche?

Cases and business hacks

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Successful companies after achieving the product-market fit manage to start growing almost exponentially

▪ Well executed business hacks, tricks and tactics

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Starting from a niche is one of the most useful business hacks that you should consider when starting a new business line

Behavioral contracts Low Cost ModelsNon-standard

advertising space

Standing on the shoulders of giants

Innovative sellingCommunity

Creating barriers of entry

Removing barriers

Starting from a niche

Creating much higher standard

Strategic Partners Using the unused

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Introduction

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In most cases makes sense to start small from a comfortable niche rather than attack the incumbent players.

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Once you establish your presence you can attack further segments slowly, but….

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Slowly, but surely you expand from the niche…..

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…and you devour new segments. Till you get to the mainstream

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There are plenty reasons why niches are great for developing your business

You are invisible in the niche

Niches are cheaper –dedicated assets / processes

You get strong customer-advocates (the unsatisfied)

Niche customer are more forgiving

From a niche you may create a totally new market (bigger)

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In most cases makes sense to start small from a comfortable niche

Geographical niche

Price niche

Limited functionality (unbundling) niche

Distribution niche

Customer service niche

▪ Specific region, city, type of location

▪ Lower or higher prices than the average

▪ Only on-line distribution

▪ Only on-line service, chat service

▪ Only basic features or 1 of the feature much better than the competition

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Cases of companies that successfully implemented niche strategy

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Tesla

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Tesla has started from a small niche of electric sport cars to test its technology and catch true funs

Find and conquer a niche

De-risk the model before scaling

Enter further segments

Go mass-market to get economies of scale

5 100 4 901 5 150 5 5006 892 6 457

7 579 7 7859 834 10 030

11 507 11 603

17 478

14 820

18 345

25 185

PreviousYears

2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3

Tesla production in units

Integrated provider of transport (cars with & energy)

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Uber

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Uber has started as limousine rides provider in San Francisco. The end game is the whole short run transportation market

Initial Black limousines in San Francisco

Expanding into cheaper cars and taxi service

Expanding into new cities

Expanding into new services (food delivery)

End game: all short run transport with autonomous

cars

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Yelp

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Yelp has started as a service only concentrated on restaurant in San Francisco. It has grown is business to include other cities and businesses

First only restaurants in SF

Cities were added one by one

New small business have been added gradually

They have concentrated on promoting the good business

For quit some time they ignored restaurants – concentrated on

users / people only

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Twitch

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Twitch (on-line streaming of broadcast of games) is a case when they have started pretty broad but had to go back to a niche to earn money

Started as a streaming platform on which you can

build your own TV

Concentrated only on gaming

Concentrated on broadcasters

Change the product to achieve alignment between the product and the group

Went global on the niche they have chosen

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Square

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Square wanted to take a piece of the payment and cash till market. It started from small independent restaurants

They have started with partners that were too small to

accept credit cards

Lower fees

Higher quality (small business were getting their money

faster)

Expanded into new business i.e. Starbucks

Expanded into integrated SaaS solutions including POS, CRM,

reservation system etc.

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Postmates

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Postmates has intentionally neglected some of its customers (restaurants) to deliver the right customer experience to other group

3-sided market

Restaurants intentionally neglected

Scaling locations

Came back to improving restaurant’s customer

experience after other groups were satisfied

Scaling revenue streams

Restaurant

Delivery men

Hungry customers

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