One of Henry Ford’s famous quotes about the Model T was, “Any customer can have a car painted any colour that he wants, as long as it is black.”
That was an era when the industrial revolution was happening, people were making peace with machines, and efficiencies were aimed for. Personalization was not even a term in the market at the time. It was all about mass-market goods at the time. Unfortunately, many general products, including FMCG, personal care, etc. remained glued to the mass market product for as long as yesterday. However, it is currently changing.
The technology is improving and the cost of production can be managed despite making different products. Customers aren’t content with whatever they’ve been presented with. The power balance has shifted from the hands of producers to consumers.
Customer is the king, as the producer swears by today. The manufacturers have to figure out a way to create products that are demanded by the customers to stay in the business. This has led to a flurry of varieties of products (Niche Products) to cater to smaller sects of the customers.
The customers now realize that even their most intrinsic wants and needs can now be addressed – Personalisation has led to the creation of thousands of smaller niches.
Even the so-called Mass Players have millions of SKUs catering to millions of niches at the same time to sustain their “Mass Player” Status.
Let us look at Walmart, Amazon, Reckitt, HUL, etc. They all target super niche markets and own those niches by building fragmented communities.
We can understand this by taking examples of targeted ads you must be receiving from, let’s say, personal care brands on social media. We can assume on aggregates that they are less of HUL or P&G and more of the ManMatters, Kama Ayurveda, Beardo, and so many. They all are specific domain-based niche start-ups on a hunt to get you converted into a customer. Let us understand what is happening.
It is an industry-standard that #1 will be 2x in volume/value to its follower, and so will be #2 from #3 and so on. The leading company sells an assortment of mass products. There are years of hard work to make a brand, product, and company number one in the mass market.
The possibility of conquering the pole leader’s position is challenging. Fighting with the established ones and their goodwill is a mammoth task. But there is a ray of hope and a way to look at this. This mass leader position is nothing but a breakup of the sales of niche smaller segments, and the long tail sums up the share of the leading brand. It is difficult to dethrone the mass market leader in the mass products but specializing and being the leader in one of these niche areas is a possibility. The niche and smaller segments are easy to convert to but require a deeper concentration and narrow approach toward the intrinsic demands of customers.
Returning to the beginning of our focused ad campaign. They’re a phenomenon brought on by the increasing fragmentation of the mass market into niche silos. Why? Personalization. The mass market isn’t made for one person, but for everyone. The niche can be made to fit type one. Let us take the example of a basic commodity like shampoo or hair oil.
To begin, an average person with no such specific issue such as hair fall or dandruff, or itchy scalp can go for anything on the shelf (read mass market). But what if you have an itchy scalp + dandruff. Or let us say an oily scalp and decreasing hairline. There could be so many. To bail you out, companies are coming up with such specific products. Recently, there have been numerous studies predicting the rise of onion sales going into making onion-based hair oil. Why? Apparently, onion juice is a holy grail for hair loss treatment. This is what creating a niche segment and fighting to win it means.
These segments are definitely smaller in size but have more profitability, an easier adoption curve, a loyal and returning customer base, and a chance to delight the customer in a personalized manner.
The future mass brands will not own 1 single market share but will hold lots of short and fragmented niches in the long tail.
Summing it up, aiming for mass-market leadership can be a daunting task with lots of resources needed to go for the fight, especially in the company’s early phase. On the upper hand, starting with a niche market allows the entrepreneur and brands to dig deeper into customer wants. It is an excellent first step that will open the horizon for expansion. Let us know what you think about this popular product and the long-tail market idea. Which industry makes the most use of it, and which is yet to reap the benefits?
The authored article is written by Mr. Manjul Wadhwa, Managing Director, Anagram Media Labs and shared with Prittle Prattle News exclusively.