José Ignacio Gafo Gómez-Zamalloa

Niche Brands have always had a strong appeal for their customers. These customers justify their Brand Loyalty + Premium prices they pay by the uniqueness + coolness that they get in exchange.

These Brands usually play on high margins (and low volumes) and go for very specific targets that can appreciate what they have to offer.

So far so good, but there is a time for every single brand where the temptation to become big, to go mass market, is there. Why, they think, if I have such a strong brand attribute + loyal customer base cannot I expand my Business and become a global player? The result is that they launch new products + accompany them with large marketing campaigns, that in many cases result in brand destruction + sales collapse in the mid and long term! This is the case for the brand loses its uniqueness + coolness + distinctive qualities when going mass.

A good and recent example could be Apple. Apple has always leveraged on its branding + design + unique quality + niche approach. At the time Steve Jobs was pushed out of the company, its new managers tried to go mass market and suffered a huge reversal! Now Jobs is back, but they are again in risk on going too far with mass marketing and lose its distinctive qualities (check for instante the demands they are facing in the USA due to quality problems).

Another one would be Starbucks, that has lost its soul by going too far with its expansion + dilution of service and product quality. It was therefore a question of time for the giant to plummet and go through a huge resizing + restructuring + market mix redefinition.

So, if this is the case, should I refrain to go mass market if I have a strong niche positioning?

Market trends show that more and more customers are looking for uniqueness + appreciate niche brands that reconfirm their identity + are willing to pay premium prices for them. But still, there is indeed room for large mass market brands if they are properly launched + managed.

Key guideliness for going mass market would be:

1. Never lose out of sight why your customers are purchasing and keep loyal to your brand and products.

2. Make sure that your brand does not lose its uniqueness and coolness for your target groups.

3. Be sure that the trade offs you are doing pay for themselves in the mid and long term.

4. Bear in mind your mid and long term strategy, and be coherente with it all the time!

When making the analysis you may realice that it is not worth going mass market with your brand and go for another alternatives. To mention three of them:

1. Develop + diversify your product and brand portfolio, and target different segments with different niche brands (which is what P&G has been doing for a while).

2. Consider purchasing another niche brands available in the market (such as Xerox did some years ago when purchasing Tektronics).

3. Work with sub-brands in order to differentiate your state-of- the-art products from the massive ones (take for instante Emporio Armani and Giorgio Armani).

Bad news are that, as usual, there will not be a solution. Only a careful analysis of the situation + common sense will tell you the right way to take.

Think Different!!!

Ignacio Gafo

Posted on 15 September 2008 in Product Management, Nuevas Tendencias, International Marketing, Branding

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