The Noodle

Power of the Niche

Building your brand means narrowing your focus and dominating your market space. Are you doing what it takes to succeed?

In case you missed it, Apple crushed it. Posting record holiday quarter earnings that exceeded all expectations in all categories, it became the most valuable company on the planet in January as its stock shares surged. Although Apple clearly is dominating today’s mainstream market, the Macintosh maker started by creating a counter-culture niche with a near evangelical devotion to all things Apple.

“They were one of the first computer companies that basically said, ‘We are going to come up with a proposition and a value statement that is appealing to a rather small group of people, and we are going to focus on that group,’” says Koert Van Ittersum, associate professor of marketing at the Georgia Institute of Technology. “And that’s what they did – they started with a small, distinct market.”

In 1997, Apple launched a campaign
that then-CEO Steve Jobs said reflected
the Apple philosophy and reinforced its
brand. Called “Think Different,” it featured
a concept called the “Crazy Ones.” The
commercials included black-and-white
footage of iconic counterculture personalities like Bob Dylan and John Lennon. Also
included was a series of print ads that focused more on brand image than specific
products. The ads featured a portrait of a
historic figure and a small Apple logo with the words Think Different in one corner. No reference was made to the company’s products. The familiar faces on display included notable innovators such as Jim Henson, Miles Davis, Ansel Adams, and Joan Baez, among others.

The Think Different marketing slogan not only shaped consumer perception, but also represented the company’s internal activities. Although Apple dropped the slogan in 2002, the Think Different mindset remains firmly embedded in the company’s culture.

Thinking differently is, in fact, at the root of competitive marketing strategies on a basic level. Laura Ries, a nationally acclaimed branding guru, author and president of Atlanta-based Ries & Ries, says that one key to successful niche marketing is being different – being the first in a category. “It would be folly to try to compete head-on with market leaders, unless, of course, you had an innovation that could be perceived as a new category,” Ries says. “When you can create the niche market, consumers perceive you to be the market leader, and you can often maintain that leadership for decades.”

Take Red Bull, which launched an energy drink brand in the U.S. market that rapidly became a market leader. Red Bull’s success incited the launch of more than 1,000 energy drink products in the U.S. market, of which nearly 1,000 were unsuccessful.

“Most of those brands made the mistake of trying to emulate Red Bull by introducing their energy drinks in small, 8-ounce cans, when they should have launched something different,” Ries says. “Monster was the first energy drink in a 16-ounce can, which became the No. 2 brand of energy drinks. Are 16-ounce cans a niche market? They certainly were when Monster was launched. But now Red Bull and many other brands also are available in 16-ounce cans.”

Today’s niche is often tomorrow’s mainstream product. Who can tell in advance?

Laura Ries, President, brand strategist firm Ries & Ries

From Niche to Mainstream

Branding experts say it’s always better to narrow your focus and try to dominate a segment of a market, rather than compete with established brands in the overall market. “Today’s niche is often tomorrow’s mainstream product,” Ries says. “Who can tell in advance?”

Certainly not Hamdi Ulukaya, perhaps one of the most successful entrepreneurs to emerge during the most recent Great Recession. Ever heard of Chobani (pronounced cho- BAHN-nee)? Most had never even heard of Greek yogurt a few years ago. But that didn’t stop Ulukaya from buying a discounted Kraft Foods plant in New York and creating strained yogurt the way it traditionally had been made for centuries in his native country of Turkey – with all natural ingredients.

“Greek yogurt was a niche market that
Ulukaya pioneered with Chobani, and now
the Greek yogurt market is booming,” Ries
says. “Chobani [now] has surpassed both Dannon and Yoplait to be- come the leading yogurt brand in the country. Who knew how big it would become when Chobani launched its brand?”

Keys to Successful Niche Marketing

According to Ries, Chobani’s successful marketing strategy is rooted in three key strategies, including being the first in a new category, giving your product a new and different name, and launching your brand with PR, not advertising.

  1. Be the first in a new category – A decades-old Greek company, Fage, was the first to import strained yogurt to the United States. Still, most people in the States had never heard of Greek yogurt before Chobani started making it here in 2007, promoting it as a tasty, naturally healthy food. During its initial launch, Chobani didn’t want to market it as a high-end health food. The strategy was to keep the costs down and ask grocers to place it near the other yogurt brands. Today, many grocers are giving Chobani a premium location in the yogurt section.
  2. Give your product a new and different name – Chobani is the Greek word for “shepherd” and is symbolic for a gift that comes from the heart.
  3. Launch your brand with PR, not advertising – According to Nicki Briggs, Chobani’s communications director, Chobani was distributed to the media and anyone else who would take it. “We felt like our product was so good that if people tried it they would like it, tell other people about it, and essentially create a ground swell,” Briggs recalls. “We also launched a mobile tour campaign and traveled across the country in the ‘Chomobile’ handing out yogurt samples at festivals.”

Did their strategy work? Chobani ended up receiving a tremendous amount of media coverage in national print (Fortune, Better Homes and Gardens, Parents magazines) and on national television (the “Today” and “Good Morning America” shows), prior to launching its first national ad campaign in 2011. In just four years, Chobani has become the No. 1 yogurt company in the country with 2011 sales exceeding $700 million.

The brand also enjoys a tremendous following of enthusiastic fans called Chobaniacs, whom have showed their love to the tune of more than 425,500 “Likes” on the social media site Facebook. In fact, the Face- book “Likes” are growing exponentially, with as many as 5,000 to 10,000 showing up daily. “We don’t see social media as a marketing tool; we see it as an outlet for authentic dialogue with our customers,” Briggs says.

“We’re very responsive to what people are saying. This is where most of our ideas for new flavors come from.”

What Next?

Van Ittersum, who teaches graduate-level courses in brand management at Georgia Tech, warns that brands with a growth curve like Chobani must be careful not to dilute their brands. “This is where a lot of great companies make a marketing mistake,” he says. “Buoyed by success, they reach to grow their markets at the expense of diluting their brands. By leveraging what you’ve built, you run the risk of destroying it.”

His advice: “Don’t destroy your brand for short-term gains.”

For example, PBR (Pabst Blue Ribbon), which, historically, branded itself as a “blue-collar” beer, today is enjoying more popularity among “hipsters” and “suits,” because of its perceived under-dog status, populist appeal and affordability. Van Ittersum says it would be a mistake for PBR to overtly target its marketing efforts to these new demographic groups. “Never alienate your central target market,” he says.

A notable and amusing brand extension flop that Van Ittersum often shares with students is the Harley Davidson wine cooler. “Harley-Davidson took their brand extension to a whole other level when they introduced a line of wine coolers in the mid-1980s,” he says. “A lot of refined wine drinkers own Harleys, but when we think of Harley Davidson, we think rugged bikers, leather jackets, tattoos, bandanas – not wine coolers.”

Nothing but Good

For brands such as Chobani, many opportunities exist for growth on the horizon. For example, the company recently launched Champions, a kid-friendly yogurt that stays true to its “Nothing but Good” slogan and mission.

Ries says the key is to ask yourself what your brand stands for in the minds of your customers. And, if you can’t answer the question with one or two simple words, you have a branding problem. Successful examples include BMW, Volvo and Mercedes-Benz. Ask their customers what the brands stand for, and you will most likely hear the following: BMW – driving; Volvo – safety; and Mercedes-Benz – prestige.

By leveraging what you’ve built, you run the risk of destroying it. Don’t destroy your brand for short-term gains.

Koert Van Ittersum, Associate Professor of Marketing, Georgia Institute of Technology

So what does Chobani stand for? “Goodness,” Biggs says. “Our product is good for you and it tastes good. We feel that, as long as we stay true to who we are – quality, good-tasting products that are priced fairly and honestly positioned, our growth is limitless.”

Building a profitable $700 million company in four years is no small feat, and Greek yogurt can’t be considered a small niche. Says Ries: “You don’t create a small niche market. You create a niche market, but you don’t know how large it will become. Every category started as a small niche market – soda, ketchup, facial tissue – and now Greek yogurt.”

Now that’s the power of niche marketing.

Defining niche marketing

Niche marketing is concentrating all marketing efforts on a small, but specific and well defined, segment of the population. Niches do not ‘exist,’ but are ‘created’ by identifying needs, wants and requirements that are being addressed poorly or not at all by other firms, and developing and delivering goods or services to satisfy them. As a strategy, niche marketing is aimed at being a big fish in a small pond, instead of being a small fish in a big pond. Also called micromarketing.

By Lorrie Bryan