Setting up a business is not an easy task in today’s competitive times. The three major challenges of setting up a business are as follows: 1) Having a business plan that would actually work. It is extremely challenging to understand the market and consumerpsychologyso that one is able to bring fresh and innovative ideas to one’s brand even if it belongs to a high demand product line. The reason why Urban Outfitters have experienced steady growth is that it was able to create a unique buying experience for its customers that set it apart from other retailers of the same product line.
It provided a sense of differentiation to the customers. Fortunately the founder of Urban Outfitters was able to understand the demands of the customers accidentally. However, it is not possible to come across accidental positive insight always; hence it is challenging to make correct inferences about consumer behavior patterns so that one’s business experiences a steady start. Not only this one should always keep one’s eyes and ears open in order to discover new things and accordingly invent strategies of success. 2) Only good business plan is not enough.
There should be access to enough capital to keep a business going. Thus the second challenge of setting up a business is to be well equipped with the capital in order to sustain one’s own expenses as well as the expenses of running a business even if it is not an instant hit. 3) Apart from having the required capital, a business man setting up his own business should have the important skills and qualities like the capability of working for long hours and the ability to keep patience even if the business is not succeeding in its initial phase.
It is extremely challenging to deal with initial failures and a person setting up a business should be ready to face this important challenge otherwise the life of the business would not be too long. 2. Niche products are products that are produced and marketed for specialized purposes. They are differential in nature. In a broad industry; niche product belongs to a narrow category but has the capacity and qualities to perform better than the larger products. They are not in conformity with other products in their category when seen from a broader perspective.
They are marketed to a select demographic group as they meet their specific need which makes its marketing quiet cost effective. Examples of niche products are: a) diapers for adults b) book on how to cope up withstresswhen you have lost your child c) hair growth medicine for people who are bald 3. Niche company would have an advantage in the market because a) it is easier to sell products to a specific target audience rather than the larger group. b) the competition of selling a product to a niche group is considerably lower than the competition one has to face in a broader product category.
d) there is lesser advertising and marketing cost attached to niche products. e) it is easy to build customerloyaltyin niche products. Yes, price would be an advantage for niche products as the consumers have lesser options to choose from. A niche product like a classy car designed only for fifteen lucky customers would fly out of the showroom despite the high price as people who have the buying capacity love to possess exclusive products. 4. The reasons why customers would pay for more exclusivity are: a) Possessing niche products is attached to a feel –good – factor.
People are happy to have something that others don’t. For this they can pay for more exclusivity. For e. g. people with high purchasing capacity would pay more to buy an exclusively designed classy car than the regular cars that everyone is buying. b) Customers pay more also for comfort. The diapers for adults is a good example for this as despite being priced high people buy it to escape bed-wetting and related problems. They want to sleep comfortably without giving any tensions to themselves as well as theirfamilymembers. c) Exclusive products are scarce in nature.
Scarcity creates demand. Hence a car lover would pay for an exclusive car as he has the fear that if he doesn’t buy it soon, it might not be available to him at all. 5. There are many ways in which a niche player can chip away at a larger competitor’s base. 1) The niche player can use a different delivery or sales channel to reach to its customers. The niche player should make the product access more convenient for customers in comparison to its competitor. Earlier books were bought in bookstores. People had to go to bookstores and browse different sections to get a book of their choice.
This scenario changed with the onset of a trend of buying book through online retailers like Amazon. com. Now customers did not have to waste time in traveling. Besides, they had the freedom to book their books at even midnight. There was no time constraint. Accessing the books became easy too as searching on the shelves gave way to a more convenient method of searching by just typing the name of the book. Needless to say this new delivery and sales channel did wonders for Amazon. com and many other online book retailers. 2) A niche player can chip away at a larger competitor’s base by providing a premium service or product.
Earlier there were beauty parlors and women use to flock to the parlors and sometimes wait in queues for their turn. There has been a tremendous rise in the spa concept these days. Apart from providing the regular beauty parlor facilities, the spa also provides different types of treatments to rejuvenate body and soul. Hence the spa concept is gaining popularity as people great premium services to choose from. Also, there is more privacy to the customers in a spa than a parlor. The Ananda Spa in the Himalayan region of India provides even higher degree of services.
It has a package which claims that the body and mind of the customers would get rejuvenated by making use of this package. People all over the world, travel especially to India to get this premium service. Since it is located in an eminent location like the Himalayas, customers pay for a niche service and location which is yet another attraction. 3) The niche player can specialize in just one product or service. People start considering it an expert in the area as it only specializes in that specific product or service. Amazon. com can again be a good example for this as it specializes in selling books online.
As a reason it remains the first choice of book lovers in these modern times. References Rue. L. W. and Byars. L. L. (1992) Management Skills and Applications. USA: IRWIN Articlebase (2010) The Advantages of Niche Marketing. Retrieved Jul. 11, 2010 from http://www. articlesbase. com/online-promotion-articles/the-advantages-of-niche- marketing-784588. html Gordon, K. T. (2002) 3 Rules for Niche Marketing. Retrieved Jul. 11, 2010 from http://www. entrepreneur. com/marketing/marketingcolumnistkimtgordon/article 49608. html Ward, S. ( 2010). Niche Market. Retrieved Jul. 11, 2010 from http://sbinfocanada. about. com/cs/marketing/g/nichemarket. htm