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The art of finding your niche

A company's success depends on both the products it sells and its marketing strategy. When you start a company from scratch, you have the major advantage of choosing your own niche which will increase your chance for success since you will be meeting a need that your predecessors may not have met.

However, identifying the right niche, based on what you do best and the market situation, requires both careful planning and research. Even the best products may not necessarily find buyers. Markets change and products based on technology may be too advanced to meet the expectations of the average user.

The following are three avenues to explore:

  • Innovative, cutting-edge products;
  • Customized solutions for specific client groups;
  • Subcontracting.


Numerous products have not yet been created or are still in the embryonic stage. While this is sometimes because no one has thought of them, it is more often because the research results and technologies required to create them are extremely recent. For instance, while many scientists believe that nanotechnology (using infinitesimal dimensions) will be the next industrial revolution, industrial applications (new materials with multiple properties) are still too limited to have widespread distribution.

In the rapidly changing health sector, fueled by the explosion of biotechnology, products such as functional foods, blood substitutes, and gene therapies are a few of the most promising niches.

In the information and communication technologies sector, language engineering, pattern recognition, material modeling software, complex molecule synthesis, etc., all belong to high potential industrial niches.

Demand, changing fashions and trends

In addition to markets that are evolving and have great technological potential, there are other specialized markets that support innovative products: niche groups such as the handicapped, people living in remote areas, collectors, sports enthusiasts, etc.

Here however, there are 2 types of risks. First, you have to ensure that the market is not too small to be viable: what is the competition? what are the incidental costs i.e. transportation, etc.? what is the likelihood that the market will grow (craze for a particular sport or lifestyle, growing segment of the population, e.g. the elderly, etc.)?

Second, this may involve a passing trend, one where you can "ride the wave", but only for a limited time. Identifying opportunities means staying informed about the values of the target market and how it reacts to products or trends; reading the professional literature should also be of great help.

It is also important to keep in mind that markets can be fickle and that the commercial potential only lasts for a certain amount of time. Therefore, the product must be easy to manufacture (production models and methods already exist), with the possibility of transferring the technology to another product that will take over when the success of the first declines. It is also important to avoid maintaining a high product inventory.

Another niche that has its own advantages and risks is that of reacting to a particular circumstance i.e. organizing games or periodic festivals, meeting environmental needs, responding to new legal requirements, etc.

Customized manufacturing

Finally, the subcontracting (or outsourcing) market where one company works for another – manufacturing products, delivering services, etc. –offers numerous possibilities. There are many sectors that lend themselves to outsourcing (aeronautics, agri-food, electronic components, instrumentation and control equipment, construction, toys, pharmaceuticals, telecommunications, etc.). Numerous companies do subcontracting work for the various private markets.

Another possibility for obtaining outsourcing contracts is via government departments and other public bodies that regularly issue requests for proposals. These usually involve very specialized orders or services.

This trend towards extreme specialization should intensify. Order givers are increasingly looking for subcontractors who can invest in research and design components that they themselves no longer wish to handle.

Frequently, subcontractors are small companies but the relationships they have with their customers, often multinationals, may be complex. Too much dependence on one customer can be fatal in the changing market. Therefore, even if a subcontractor is created to meet the needs of a single or main customer, it should expand its customer base as much as possible.

Regardless of which option you choose (innovation, niche market, or subcontracting), you must constantly be looking out for signs of new trends that are gaining in popularity, and become an expert at analyzing them. A business leader who innovates must have a global perspective, be well-informed, and be able to synthesize current and future trends.

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