8 minutes | Jul 21, 2020
Power of Niche Markets
The Power and Importance of Niche Markets – How do you connect with potential customers? One option is to spend half a year and thousands of dollars mapping out a target audience, identifying pain points, and building a comprehensive marketing strategy. Or you could just sell left-handed scissors. That’s what the founders of Lefty’s did. They realized that a specific group of Americans have trouble finding a wide range of everyday goods, including office supplies, kitchen utensils, and tools. Because only about 10% of people are left-handed, it isn’t cost-effective for big companies to invest in designing for their needs or marketing to them. But Lefty’s realized that by only stocking and selling left-handed products, they could instantly create a loyal customer base with automatic buy-in and a real interest in seeing the company succeed, because its very existence was such a significant quality of life increase for them. That’s the power of niche marketing: low marketing costs, strong network effects, reduced competition, high consumer trust and brand loyalty, greater pricing control, and more. Here’s how it works. What is a Niche Market? This question isn’t as straightforward as it appears. The simplest answer is that a niche market is a group of potential customers with something in common. That something can be location, demographics, habits/behaviors, commercial needs, or mental traits and preferences. One recent study collected definitions from more than 20 years of research, and isolated a few other key characteristics. In addition to having something in common, consumers in a target market are: Underserved or overlooked by mainstream product/service providers Willing to pay extra for products/services tailored to their needs A comparatively small or limited group, usually united by social connections Most commonly, the way niche markets work is that a shared characteristic (like being left-handed) gives a group of people a shared lifestyle need (like looking for left-handed products), and that lifestyle gives them a purchasing behavior in common (buying left-handed scissors). That turns them into a ready-made market. There are endless examples: owners of parakeets with a habit of escaping their cages; people with long, curly hair; people with swampy, mosquito-prone back yards; homeowners with leaky plumbing in a particular small town. High-profile examples include Square, makers of a smart phone plugin for processing credit card payments, and American Journal Experts, who provide specialist editors for researchers who are not native English speakers. Here’s the key feature that makes these niche markets so useful and profitable. Under normal circumstances, members of niche markets don’t have their needs met. Without Square, street vendors were stuck using cash. Without American Journal Experts, millions of scientists had to rely on friends and family to publish in the world’s top journals. By designing products and services just for members of niche markets, companies immediately make them feel special. The Benefits of Niche Markets The most obvious is brand loyalty. If someone has severe allergies, they’re likely to patronize a restaurant that goes out of its way to be allergen-free, even if there are a dozen other exceptional eateries just around the corner. And brand loyalty is one of the simplest consequences of the biggest advantage that comes from working with niche markets, which are network effects. Essentially, businesses that successfully target niche markets become part of a pre-existing community—a group of people whose interests are aligned. That makes it easier to earn loyal customers, but it also makes it easier to build trust, become an established expert, identify new trends and opportunities, and expand into new service areas. There are three other major benefits: First, operating in a niche market gives companies far more control over pricing. Because customers feel that they are being given a special, just-for-them product or service, and because the product or service tends to be something they already wanted before the company offered it, they’re typically willing to pay far more than would be expected in a mainstream market environment. Second, there is less competition. Most large firms will lack the knowledge or agility to target niche markets, as their focus has to be on finding and keeping the largest possible audience. This gives startups and small businesses room to establish themselves. Third, marketing is cheaper and more effective. By targeting a niche market, firms can immediately be confident that their audience is receptive to their messages, the content that appeals to one person will appeal equally to others, and that market-related content will be consistently popular. Pay per click advertising is much easier to scale in niche markets, SEO is simpler and more reliable, and blog or article writing with more consistency generate traffic and activity. At the same time, word-of-mouth promotion will take place automatically and drive sales far more effectively than it does otherwise, and all forms of advertising will have higher conversion rates. Conclusions Of course, there are some downsides to serious niching. For one thing, it can be hard to expand: you can’t outgrow your niche without fundamentally changing your business model. For example, you depend on the niche for survival: if your community dissolves, so does your revenue stream. And finally, the small- and medium-sized businesses that usually populate niches are vulnerable to being outcompeted if a larger firm takes an interest. But those risks are usually worth it, especially for new, local, or small businesses. The advantages in terms of marketing spend and customer loyalty alone make niching an obvious choice for most. The question isn’t whether you should seek out a niche market, it’s how to get involved and become part of the community. My advice? Start local, and take your first steps by building individual connections. Get to know the concerns and challenges faced by your audience, and build from there. References Akbar, F., Omar, A., & Wadood, F. (2017). The Niche Marketing Strategy Constructs (Elements) and its Characteristics-A Review of the Relevant Literature. Galore International Journal of Applied Sciences & Humanities, 1(1), 73-80. Feng, Y., & Hu, M. (2017). Blockbuster or niche? competitive strategy under network effects. Competitive Strategy Under Network Effects (September 1, 2017). .NET Institute Working Paper, (17-13). Fonner, R., & Sylvia, G. (2015). Willingness to pay for multiple seafood labels in a niche market. Marine Resource Economics, 30(1), 51-70. McCormick, K. (2016, 22 July). 7 benefits of niche marketing. ThriveHive. https://thrivehive.com/niche-marketing-small-business/ Speiser, M. (2020, 21 January). Niche market: Definition, examples, and how to find one for your business. https://www.fundera.com/blog/niche-market Thilmany, D. (2012). What are Niche Markets? What Advantages do They Offer?. Assessment and Strategy Development for Agriculture. Toften, K., & Hammervoll, T. (2009). Niche firms and marketing strategy. European Journal of Marketing, 43(11-12), 1378-1391.  McCormick (2016); Speiser (2020); Thilmany (2012).  Speiser (2020).  Akbar, Omar, Wadood, & Tasmin (2017).  Fonner & Sylvia (2015); Thilmany (2012).  Akbar, Omar, Wadood, & Tasmin (2017); Toften & Hammervoll (2009).  Feng & Hu (2017).  Fonner & Sylvia (2015); McCormick (2016).  Speiser (2020); Thilmany (2012).  Feng & Hu (2017); McCormick (2016); Toften & Hammervoll (2009). Link: https://www.leftyslefthanded.com/Default.asp
9 minutes | Jul 8, 2020
Digital Sensory Marketing
Why does anyone eat Hershey’s Kisses? They’re normal chocolates without any of the flavor, texture, environmental, or marketing innovations that distinguish newer products. The answer has to do with the foil wrappers. The delicate crinkle as they’re peeled away. The way they shine and catch the light. The way the delay the experience of eating by just the right number of seconds, letting your mouth water with anticipation as you smell the chocolate. That’s touch, vision, and taste, all triggered in real, measurable ways by the design of the product’s packaging. This is sensory marketing—design choices intended to activate consumer’s senses in ways the product’s primary function cannot. Olay’s “thermal” facial products produce heat when used. The heat doesn’t affect their function, but it makes them feel like they’re working. In the same way, 2014 M5 BMWs (and many since) use microphones and speakers to transmit the low rumble of the engine into the car’s cabin, increasing the driver’s sense of connection, power, and control. Sensory marketing is incredibly powerful, and new technologies are only just now beginning to show us how much is possible, and how quickly and effectively potential customers’ emotions can be engaged to build brand loyalty and identity. Just consider this example: Dunkin’ Donuts piloted a campaign in South Korea in which their jingle played on city buses accompanied by an artificial scent of coffee created by a device called an atomizer. Travelers associated the ad with the enticing smell, and over the weeks that followed, visits to Dunkin’ Donuts locations near bus stops increased by 16%. Purchases at those locations increased by almost 30%. Why Does Sensory Marketing Work? Sensory marketing draws on the deepest and most powerful pars of the human psyche. It slips straight past our socially-conditioned desires and wants, appealing instead to our strongest subconscious needs: warmth, safety, light, satisfaction, and so on. For instance, recent research suggests that glossy textures are appealing to us—and motivated purchasing decisions—specifically because they activate our innate, evolutionary need for water. But the effect is much broader than the simple appeal of glossy textures. It draws on what scientists call “embodiment,” the way that physical sensations help us make decisions. It’s easy to recognize: pay attention to the muscles in your abdomen as you say the word “but,” and notice the slight increase in muscle tension that you experience. An ad that makes us feel tense is not going to be very effective—try using “and” instead. And our five senses, of course, are far more powerful than words. For example, one experiment added an unusual smell (teatree oil) to pencils, and found that it made participants more than four times as likely to remember the pencils’ brand names. Another looked at people’s willingness to buy particular foods, and found that making judgments about a given food decreased people’s appetite for it just as much as actually eating the food did. Visual stimulation can tap into hunger, and through that, affect our decisions about what to buy. Femininity is subconsciously associated with bright colors, and products targeted at women sell better when they use lighter typefaces for logos and product names; the reverse is true for men. The fact that sensory stimulation activates our emotions is one part of why sensory marketing works; the other is how subtle it is. Bus riders in South Korea were not aware of why they wanted coffee so much more than usual, and for that exact reason they found themselves heading to Dunkin’ Donuts. It’s powerful advertising that feels like our own decision. How To Incorporate Sensory Marketing In Digital Marketing? Of course, most modern advertising is digital, not physical. It’s all very well for bloggers and experts to recommend using thick, attractive cardstock for business cards or filling the store with a carefully designed scent. None of those cues can be added to a virtual point of sale. What are our options? There are two answers. First, traditional digital marketing media can be harnessed to evoke sensory experiences without actually delivering them. Consider: Mixing audio, video, visual, and text-based content Including sensory language (texture, weight and heft, smell, temperature, sound) in product descriptions or ad copy Appealing to specific, sense-rich memories in the way a product is described or presented Drawing direct comparisons to powerful sensory experiences Using high-quality, closeup images and bold color contrasts in visual assets Integrating audio or video content in unexpected ways The second answer is that new technologies are finally beginning to deliver real options, although none are robust and market ready at time of writing. The most important categories are innovative use of touchscreens (which can now include haptic feedback such as vibration), atomizers (including at least one iPhone-compatible device that emits specific scents while playing a mobile game), and augmented or virtual reality technologies, which can add additional layers of visual, audio, and haptic information to the static displays we are more familiar with. These technologies have already displayed tremendous potential, and we have barely begun to explore them. Conclusions Perhaps the leading researcher in the field of sensory marketing is Aradhna Krishna, head of the Sensory Marketing Laboratory at the University of Michigan. In an interview with the Harvard Business Review, she described how these new techniques are changing consumer-provider relationships. “In the past, communications with customers were essentially monologues—companies just talked at consumers. Then they evolved into dialogues, with customers providing feedback. Now they’re becoming multidimensional conversations, with products finding their own voices and consumers responding viscerally and subconsciously to them.” Sensory marketing is among the most powerful tools companies have available to inspire purchasing behavior in their target markets. As the technologies involved begin to mature over the next several years, there will be almost unimaginable potential to capitalize on. It’s an opportunity that no company can afford to miss. References Harvard Business Review. (2015, March). The science of sensory marketing. Harvard Business Review. https://hbr.org/2015/03/the-science-of-sensory-marketing Krishna, A., Lwin, M. O., & Morrin, M. (2010). Product scent and memory. Journal of Consumer Research, 37(1), 57-67. Krishna, A., & Schwarz, N. (2014). Sensory marketing, embodiment, and grounded cognition: A review and introduction. Journal of Consumer Psychology, 24(2), 159-168. Larson, J. S., Redden, J. P., & Elder, R. S. (2014). Satiation from sensory simulation: Evaluating foods decreases enjoyment of similar foods. Journal of Consumer Psychology, 24(2), 188-194. Mather, L. (2018, 14 December). Ummm, Behr Made an ASMR Video with Paint. Architectural Digest. https://www.architecturaldigest.com/story/ummm-behr-made-an-asmr-video-with-paint Mavani, P. (2019, 11 February). 5 Ways Sensory Marketing Can Drive Digital Sales. RankWatch. https://www.rankwatch.com/blog/5-ways-sensory-marketing-can-drive-digital-sales/ Meert, K., Pandelaere, M., & Patrick, V. M. (2014). Taking a shine to it: How the preference for glossy stems from an innate need for water. Journal of Consumer Psychology, 24(2), 195-206. Petit, O., Velasco, C., & Spence, C. (2018). Multisensory consumer-packaging interaction (CPI): The role of new technologies. In Multisensory Packaging (pp. 349-374). Palgrave Macmillan. Petit, O., Velasco, C., & Spence, C. (2019). Digital sensory marketing: Integrating new technologies into multisensory online experience. Journal of Interactive Marketing, 45, 42-61. Quay, A. (2013, 9 December). iPhone attachment produces a popcorn scent when you play a game. DesignTaxi. https://designtaxi.com/news/362576/iPhone-Attachment-Produces-Popcorn-Scent-When-You-Play-A-Game/? Semin, G. R., & Palma, T. A. (2014). Why the bride wears white: grounding gender with brightness. Journal of Consumer Psychology, 24(2), 217-225.  Krishna & Schwarz (2014); Petit, Velasco, & Spence (2018).  Harvard Business Review (2015); Petit, Velasco, & Spence (2019).  Meert, et al. (2014).  Krishna & Schwarz (2014).  Krishna, Lwin, & Morrin (2010).  Larson et al. (2014).  Semin & Palma (2014).  Krishna & Schwarz (2014); Mavani (2019), Petit, Velasco, & Spence (2018).  Quay (2013).  Petit, Velasco, & Spence (2019).
7 minutes | Jun 29, 2020
Buying Time - Why Your Business Needs To Help Consumers Save Time And Simplify Choices We talk a lot about value add, but most of that is just marketing. There's another kind of value add. We can offer people ways to improve their lives. Streamline their routines and reclaim some of what they've lost track of in the busyness of modern work life. We can give them time. The Research Buying time makes people happier. That's what the science is telling us. That might mean paying someone else to handle unpleasant, repetitive daily tasks, whether you are hiring a personal assistant or using services like Task Rabbit, DoorDash, or Wag! to outsource everyday responsibilities. It could also mean using an app to skip the line at the movie theater or paying for curated services to avoid the worst parts of shopping. It might mean any number of new ideas and exciting innovations. What they all have in common is that they ease the pressure of modern life. Both high- and low-paying jobs demand ever-more of our time, pulling us away from personal and family life by demanding that we are always on the clock, that we spend more time commuting, that we channel our energy and focus into work. Over-scheduling and modern management tell us how valuable our time is, leaving us with the impression that we never have enough of it. That feeling of “time pressure” is a major source of stress, and it makes us less productive even as it makes us more anxious, less focused, and less happy. Entrepreneurs are increasingly recognizing the problem of time pressure, and they are finding ways to help us cope. The research shows that spending money to buy time—paying someone to deliver food, complete household chores, or assist with child or pet care—has a “buffering” effect. It protects us from stress. It helps us feel that we do have enough time, after all. Not only does it actually give us more time in the day, it also serves even more important function of helping us feel relaxed about our schedules. Time & Stress The same is true for time-saving products. In one major survey, more than a third of people who bought time-saving apps, services, or devices said the main reason for doing so was not actually to save time. What was it then? To reduce stress, of course. That's what buying time is all about: giving yourself a breather from the frantic pace does every day life. Present-time perspective Reduced time pressure also makes it easier to have what is called a “present-time perspective,” which means that you are focused on your immediate situation, rather than on what you need to do next or how your actions are contributing to long-term goals. People with present-time perspectives have an easier time focusing on social relationships, and on the small moment-to-moment successes that are so important to maintaining a positive self-image and a sense of progress. Time-Saving Products and Solutions So, buying time makes people happier. In the head-to-head comparisons, time-saving purchases left people happier and more satisfied then other goods and objects. But some companies are ahead of the curve, packaging time-savings into products the consumers were already interested in. Monthly subscription box services are perfect example, especially those that get it right. Among the earliest and most effective is Dollar Shave Club, which offers razors and grooming products, and uses the tagline, “Shave Time. Shave Money.” Providers who `have more traditional services can also find ways to incorporate time-saving into their offerings. Movie theaters, for example, increasingly used apps to allow pre-booking and food purchases that include a chance to bypass the normal lines. Automated customer service, through the use of chat bots and similar AI tools, allow customers to have their needs met even during busy hours. And recently, Uber partnered with Spotify to allow passengers to control the music that plays during their rides—which might not seem like time-saving, until you realize the time spent traveling is often time lost. If it can be turned into an enjoyable experience, the value of Uber’s core service increases tremendously. There is also a more pragmatic side to time-saving services. It is important for companies to start paying serious attention to compensating their employees with time as well as money. Salary and retirement plans are important tools for retention and motivation, but so too are vacations, sabbaticals, flex hours, and opportunity to work from home. Not only did those times savings increase employee well-being, they also boost productivity. Take-Home Lessons Successful businesses lead the way. In 2020, leading the way means getting creative. Giving your customers chances to simplify and streamline. It means recognizing that all of our lives are getting busier and busier, better managed and better organized, and that right now; what people want most isn't another product or a slick ad. It's time. Every company can find ways to build time-savings into both their product or service and their brand image. Right now, there is no more effective way to show your customers or clients that you value what they value. That you are looking for ways to make their lives better. The research is solid, all the trends are pointing in that direction, and it is clear that buying time is now a major market force. Sources  Mogilner et al. (2018); Whillans, Dunn, Smeets, et al. (2017).  Lévesque & Stephan (2020); Whillans (2017).  Mogilner et al. (2018); Whillans (2017); Whillans et al. (2018).  GlobalData Consumer (2017).  Lévesque & Stephan (2020).  Whillan et al. (2018).  Kasriel-Alexander (2016).  Mogilner et al. (2018).