August 2013 | Strategy
Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.
Contributor: Mauro Guillén, PhD, Dr. Felix Zandman Professor of International Management, The Wharton School, University of Pennsylvania; and co-author of the new book Emerging Markets Rule: Growth Strategies of the New Global Giants.
Gain a foothold in a global market by delivering a unique product or service to a niche group of customers.
Over a century ago, Henry Ford became the world’s first billionaire by launching the age of mass production, paying attention to the mainstream market and ignoring the niches. “Any customer can have a car painted any color that he wants so long as it is black,” Ford quipped. And while that philosophy worked well in 1909, the world is now a radically different place.
Globalization has made niches more, not less, relevant, because customer preferences remain fragmented across countries and customer groups. Today, companies from emerging markets are using market niches as launching pads to global domination. Haier of China, for example, recently became the world’s largest household appliance brand. Their global success began with a small product launch in a tiny niche segment of the U.S. market — one that large American companies didn’t even know existed. Now established firms in any industry who ignore the value of niches can find their market share eaten away by upstarts who have learned how to harness the power of niches.
Whether you plan to use niches offensively, to enter a new global market, or defensively, to keep global competitors from getting a foothold in your own, there are three key factors that make catering to niches attractive: (1) new technologies and production systems allow companies to produce smaller batches at a profit (witness Toyota); (2) selling to a small market segment across a large number of national markets can be enormously profitable; (3) niches can be stepping-stones into the mainstream mass market, especially when entering a foreign country with large, entrenched, local competitors.
Nano Tools for Leaders® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director is Professor Adam Grant, author of Give and Take.
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