Sometimes a competitor is just too entrenched, too strong, too well equipped to directly face in battle.\u00a0 At least that is the conventional wisdom.\u00a0 Yet, there are constant examples of new entrants into a niche that grow, prosper and sometimes even become dominant.<\/p>\n
So when do we know which course to take?\u00a0 Quietly abandon a niche? \u00a0Refuse to engage?\u00a0 Or charge in full speed?<\/p>\n
In one industry I know well, the dominant player with 22% market share was acquired by one of the largest companies in the technology world.\u00a0 Everyone, including those connected with the newly acquired dominant player, wondered what changes would affect ![\"battle-the-dragon\"](\"https:\/\/berkonomics.com\/wp-content\/uploads\/2016\/10\/Battle-the-dragon-300x209.jpg\")
their company and their personal lives and fortunes.\u00a0 Well, even though that acquisition is still playing itself out on the field of battle, it appears quite clear that the new parent has directed its new subsidiary to abandon the lower end of the market and focus upon the larger sales, corporate customers, and major brands.<\/p>\n
And if that new strategy is proved to be true, the five\u2013hundred\u2013pound gorilla in that niche just moved out of the way of many of its smaller competitors, leaving a market that will surely see a scramble of new competition in the near future.<\/p>\n
[Email readers, continue here…]<\/em><\/span> \u00a0What if you had abandoned that market, reallocated your resources, and focused instead upon other non\u2013competitive geographical or industry segments?\u00a0 There\u2019s an example of avoiding the encounter and losing the lead position when an opportunity to compete surfaces unexpectedly.<\/p>\n But doesn\u2019t it take seemingly unlimited resources to compete against the gorilla in a niche?\u00a0 The answer is found in defining the niche itself.\u00a0 Has your competitor left a geographical area virtually untouched?\u00a0 Forgotten about selected vertical markets within the niche?\u00a0 Been skewered for slow customer service?\u00a0 Each of these discoveries would provide an opportunity to compete and perhaps win, defend and build from a distant base to fight the larger battle.<\/p>\n One more thing, absolutely common to technology companies:\u00a0 generations of technology do not transition easily. Leading players in one generation often do not transition well into the next, as they carry the burden of a large existing user base with demands for support, feature\u2013functionality and attention that drain the resources of even larger companies.\u00a0 I\u2019ve seen these waves of technology first hand in one niche, counting six such waves during the past 35 years, and watching new entrants arrive during each transition to attract customers with new products using new tools, sometimes to grow larger over time than the last generation\u2019s dominant player.<\/p>\n So, how do we answer the question?\u00a0 Battle or avoid?\u00a0 We look for the under-served niches, avoid the direct encounter until dominating at least one of those niches, and use the profits and reputation from that small victory to take on ever\u2013larger niches once dominated by the gorilla.\u00a0 We\u2019ll call that clever avoidance for the sake of a much fairer but later battle.<\/p>\n","protected":false},"excerpt":{"rendered":" Sometimes a competitor is just too entrenched, too strong, too well equipped to directly face in battle.\u00a0 At least that is the conventional wisdom.\u00a0 Yet, there are constant examples of new entrants into a niche that grow, prosper and sometimes … Continue reading