Niche competitive advantage for small business and start-ups

A niche competitive advantage is a strategy that is effective for start-ups and small businesses that do not have the resources to go after larger sections of the marketplace. Michael Porter’s General Strategies Model identifies three strategies:

Cost Leadership Strategy focuses on increasing profits by reducing operating costs and charging lower prices. This requires an investment in technology, efficient logistics and the continual cost monitoring to be able to continually beat your competitors on price. A prime example of this in the food retail is McDonald’s with their optimised food delivery, training and vertical integration where they own the facilities that produce the ingredient mixtures.

In furniture retail, IKEA has nailed standardised products, self-assembly and out-sourcing manufacturing to low wage countries. Note also that IKEA has also followed a differentiation strategy by creating a new and innovative business model. Amazon is a cost leadership star in online retail compared to bricks and mortar retailers. They achieve this by the robust and relentless pursuit of economies of scale, process automation plus advanced computing and networking technologies. While using continuous improvement of IT infrastructure, Amazon also has elements of a differentiation strategy.

Differentiation Strategy aims to make your product attractive and unique in comparison to those of your competitors. It requires an investment in creativity, innovation, being ahead of trends, the provision of high-quality products and effective marketing and sales.

Well known for its innovative products of elegance and simplicity is Apple. They distinguish themselves from their competitors through minimalist product design, a unique operating system which enhances the user experience and a pricing strategy commensurate with its level of quality.

Emirates, state-owned Airline in the UAE differentiate themselves with exceptional customer service in the form of passenger personal space, inflight cuisine and entertainment, complimentary beverages and Wi-Fi. They invest heavily in the latest technologies including advanced navigation tech.

Tesla electric vehicles have made it their mission to accelerate us toward sustainability, targeting the luxury sector and then moving into lower price points and larger market segments. They achieve differentiation through product innovation including environmental friendliness, high tech, customisation, software updates, solar panels, and self-drive features. Another key differentiator is the lack of a marketing strategy, aiming instead for referrals and word of mouth rather than TV commercials.

Focus Strategy concentrates on developing products and services for a niche market. This strategy requires a deep understanding of your customer’s needs and meeting those needs with a special something that others cannot. Focus strategy is not normally enough to win a substantial market share on its own, so needs to be teamed with either Cost Leadership or Differentiation Strategy. A niche can be a particular buyer group, unique geography, special product attributes that appeal only to certain individuals, a particular product line – e.g. tea, shared values such as “fair trade” or “free-range,” or a combination of these.

Sisterhood Women’s Travel specialises in high quality, women-only travel experiences which aim to provide community, adventure and freedom, fundamentally changing the way women experience travel. Nice Kitty Clean Treats focus on a delicious and innovative range of raw, natural and wholesome treats that are vegan, gluten, dairy and refined sugar-free. Both these companies have a niche Focus and a strong Differentiation Strategy.

If you have your sights set on going big, consider Chan Kim & Renée Mauborgne’s “Blue Ocean” Strategy. This strategy pursues Differentiation and Cost Leadership to open up a new market space and demand. You aim to make the competition irrelevant by creating and capturing an uncontested market space. Consider Apple, Airbnb, Uber, UberEats disruptors to the personal computer, accommodation, taxi and food delivery industries.

Viktoria Darabi, Founder, Savvy and Successful and Business Connect Advisor, Western Sydney Business Centre

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Forget footy and netball — fans are desperate to see these niche sports survive the pandemic

From people dedicated to an archaic form of tennis, to a 60-year-old table tennis association in a tiny sheep-farming community, country clubs for sports that usually fly under the radar are feeling the pinch of the pandemic.

Real tennis is an old form of the game played indoors, on a larger court, and similar to squash — you can hit the ball off the walls.

It is a heritage sport, a progenitor of modern lawn tennis, and one the members of the Ballarat Tennis Club takes pride in keeping alive.

But the club is now suffering under COVID-19.

“We’ve basically no income, it’s just stopped our income flat,” club committee member and player Catherine Faull said.

“Initially when it happened, we called out to members to pay their bills straight away so we could just get a handle on how much we had and what we needed to do.”

The club has around 120 members, who would normally pay a $399 early membership fee — out of goodwill, the club did not ask members to pay that fee this year, charging only for the month or so it was open.

Catherine Faull is concerned the future of her historically significant real tennis club is at risk because of the pandemic.(Supplied: Ballarat Tennis Club)

The club was still working out the toll of that financial hit.

“We have a professional tennis player, Andrew Fowler, who is employed by the club … so that’s been hard for him, thank goodness the JobKeeper kept him going,” Ms Faull said.

Unlike Aussie Rules, or soccer, the fact real tennis exists as a played sport is due to clubs like Ballarat’s — without them, it could be relegated to the annals of history, like a language that ceases to exist when its last speaker dies.

A real tennis court in Ballarat.
The rules of real tennis are similar to those of lawn tennis, but they are more complicated.(Supplied: Ballarat Tennis Club)

“We’d love to keep it going because, historically, it’s fascinating and we’d love to preserve that,” Ms Faull said.

“We’re planning for future events, but we’re also realistic that this 40-year-old club is at risk, basically.”

Croquet members ‘keen as mustard’

The Ballarat Western Croquet Club has been running for more than a century — they have also lost significant amounts of income because of the pandemic.

“We’ve cancelled probably three or four competitions,” club secretary Jenny Leviston said.

“But the main thing that’s affected is the cancellation of our groups that come to visit … we use them as one of our main fundraisers.”

Black and white picture of people playing croquet in Ballarat early in the 20th century.
People with croquet mallets in Ballarat early in the 20th century.(Supplied: Ballarat Western Croquet Club)

Croquet requires a pristine playing surface, and lawn maintenance is not cheap.

“The cost of chemicals is quite expensive, ” Ms Leviston said.

“We’ve got the greenkeepers cost, and just before Christmas last year, we spent over $3,000 top-dressing our lawns.

“We were hoping to get that money back with the competitions and the green fees in the new year, which we weren’t able to because we did have to stop playing very early in March.”

The clubs membership fees are kept low, as a lot of members are on fixed incomes — luckily, the croquet community is lively and dedicated, and so membership numbers haven’t plummeted over the last few months.

The club secured a State Government grant earlier in the year, but it was spent immediately on the water bill.

“The green-keeping is the main thing, and the water,” Ms Leviston said.

Multiple elderly people mow and rake the lawns at a croquet club.
The Ballarat Western Croquet Club lawn requires a lot of care from members.(Supplied: Ballarat Western Croquet Club)

“Our last water bill before Christmas was nearly $1,000 … so that’s a lot of money for a little club.”

Ms Leviston is hopeful the tenacity of the members will see them through this difficult stretch.

“I’m positive that the club will keep going because I know that our members are as keen as mustard and they love to be out on the court playing,” she said.

Players keep it going in between sheep farming

David Rowbottom has been the president of the Orford and District Table Tennis Association since 1972 and he said despite the setbacks brought on by the coronavirus pandemic, it will not be folding anytime soon.

The association was set up in the 1950s in the tiny south-west Victorian sheep-farming community of Orford, which had just over 100 residents at the 2016 census.

The Orford Memorial Hall.
The Orford Memorial Hall in south-west Victoria has been the base for a strong table tennis association since the 1950s.(ABC South West Victoria: Sian Johnson)

Mr Rowbottom said many similar associations had stopped operating over the years, but his club had a “tremendous core” of players that had stuck around for decades.

“It’s a great, clean sport and very rarely does anyone get injured,” he said.

The association usually has about 30 players but Mr Rowbottom said it was becoming more difficult to maintain numbers.

They carefully manage their funds and import high-quality tables from Germany and inherited some from the 2006 Melbourne Commonwealth Games.

“Family farms are disappearing and the young people go to the city for their jobs and not a lot stay around,” Mr Rowbottom said.

A man wearing a mask with a young woman and a boy.
David Rowbottom is instilling a love of table tennis in his grandchildren Ally, 14, and Jensen, aged 8.(ABC South West Victoria: Sian Johnson)

At the beginning of 2020 the association managed to attract more players from coastal hub of Port Fairy, but apart from a few games in between restrictions the competition has mostly been on hold.

“We’re pretty certain that the majority of the players that we picked up will keep going, but there is some concern about next year,” he said

“It definitely won’t be the end, though — we’ll keep going.”

Small sports rely heavily on volunteers

Chief executive of VicSport, Lisa Hasker, said weathering the COVID-19 storm has been tougher for the smaller clubs.

“You’re a big sport, you have resources to lean on … but the small sports are run pretty much entirely by volunteers,” Ms Hasker said.

“There’s a lot of areas where it’s harder because everything falls back onto those volunteers.”

Ms Hasker said the variety these smaller niche sports provide enrichens the sporting landscape around the Victoria.

“We’re all different; we all like different sports,” Ms Hasker said.

“But it doesn’t suit everyone, so I think [variety] is vital.”

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