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Did You Choose Your Market Niche or Did You Get It by Default?

For many years,

By Dr. Joe Webb
Published: May 30, 2013

For many years, experts have told printers to focus on particular niches in their sales and marketing. The purpose is that each niche has unique characteristics that once understood give the printer a competitive advantage in understanding the unique needs and wants that companies in that niche have. This assumes of course that the pursuit of the niche is deliberate. They're usually not. Most printers find niches because of their field sales effort. They find one customer that is particularly lucrative and then they seek to find others like them. This is a business class niche, and the main reason why you could tell that a printer sales rep had used a hotel room: that page was ripped out of the yellow pages. Sometimes niches are the result of geography. “We sell to corporate headquarters” is easy when your business is in an area where there are a lot of corporate headquarters. That was great if you were a New York City printer in the 1960s. Or, “we sell to high tech” is fine if you're in Austin, San Jose, or in my new home of the Research Triangle Park near Raleigh, NC. Did you locate your business there because you have expertise in high tech or did you want to start a printing business and that's the kinds of customers there are in an area. Cloning was not something in the biotechnology industry, it was print salespeople and owners saying “we need more customers just like that new one we just found.” Sales “guys” were always looking for “the sweet spot” where all these kinds of customers congregated. Good luck. If there was something called tactical luck, that was it. Niche strategies for a print business are a choice, not an accident. If they are “just because” niches, then they are not strategic, they're just lucky. In the past, niche strategies also had an aspect that was centered around equipment. You sold to magazines and therefore had a web or gravure press. You were a direct mail printer and had a lettershop capability that gave your business a distinct advantage against printers who had to use a trade service to access those services. Niches had great rewards for many decades, and printers who found the right mix of sales and marketing and specific capital investments did well. In terms of the economics of it, selecting a niche made great sense, but few people realized how risky those decisions were. A lettershop specializing in newsletters is nowhere today. Magazine printers have been slammed by declines in page counts and frequency. Catalogers changed their mailing patterns as they became more reliant on e-commerce. Now is not the time to specialize in phototypesetting or color separation equipment. It's not equipment any more. It's data and people. The profits were higher not just because of the specialized use of capital but because of the acceptance of greater economic risk. Every time you choose to focus on a niche, you limit your future flexibility because your fiscal capital is tied to pursuing that niche. It should be, because half-hearted focus on a niche is no focus at all. Now what happens? What is the nature of new niches? Niches today are built on the difficulties of reaching target audiences in an overcommunicated marketplace with overflowing choices of tools to reach those audiences. The two defining aspects of niches today are people and data, with a lesser emphasis on capital investment than there was in the past. I have seen more printers hire marketing specialists in the last two years instead of hiring more salespeople. These specialists are not there to market the printing business, but are there because of their experience in particular industries. The data aspect of the business is because they have an understanding of the customer bases that those industries seek to attract, understand the metrics of those data, where to find those data, and most of all, have insights about how to track the effectiveness of communications programs. For the companies that have done this, their niche selections are becoming more strategic and less reliant on happenstance. While they may have stumbled on them by the gaining of a large customer, rather than ripping a page out of a phone book and calling it their lead generation program, they have instead made a full commitment to that niche. Choose niches because they make some sense and because you have something special to offer. Remember the risks. And mitigate that risk by constantly seeking new niches. The market is changing too much to make long-term capital investments that do not have adaptability to other niches and future applications. Look at niches for their ability to open new channels to digital media applications that you may offer or re-sell. The only strategy that works in the long term is creating a flexible and adaptive business that can take advantage of niche strategies and re-mobilize for new ones as they appear. # # #

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink's Economics and Research Center.



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