Niche Market Defined Essay
According to Phillip Kotler, a niche is a narrowly defined customer group. Niche markets primarily consist of market segments within the larger market place who have similar demographic, psychographic, buying behavior and/or lifestyle characterics. The Fenix Group started with two entrepreneurs, Anthony Keung (Chinese) and Masaaki Ogino (Japanese) who shared the same business philosophy, which is aiming at niche markets, that most times are left untouched or under-served.
How did Fenix identify and tap into different niche markets?
Knitwear Manufacturing Niche Market
The Group first niche was knitwear manufacturing after which they diversified into fashion and general merchandise retailing. Fenix identified every new niche market out of experience and knowledge gained from previous business opportunites. For instance, knowledge gained from working at a yarn manufacturing supplier enabled them them to move from trading imported Japanese yarn to Hong Kong knitted factories to expanding into knitwear manfacturing and setting up their own manufacturing company in Hong Kong.
This venture was successful in the Japanese market due to increasing demand for high quality knitwear due to increased labor cost of local production. Fenix opened knitwear factories in South and Central China to minimize cost and improve their competitiveness by concentrating only on high quality knitwear due
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Fashion Retailing Niche Market Fenix first experience with brand retailing was in the early eighties when they opened two counters in a department store in Sogo, Hong Kong that sold multiple designer clothing from customers. Due to poor profits, Keung and Ogino changed their strategy and sourced merchandise from known knitwear manufacturers and retailed them with the Fenix labels. This slighty improved the bottom line which allowed the company to breakeven but was still below expectations.
Experiencing these hurdles in the brand retailing business Fenix was undetttered and continued to search for new ways of bridging the gap in the market. The niche market identified in fashion retailing was based on the experience of being Prada franchised retailer for twelve years in the high- end market. Even though Prada protected their core competencies, the working relationship created a lot of exposure in the mechanics of the market which allowed the company to gain valuable insights into high- end consumer markets in Asian, European and US market.
After being advised that Prada will not renew the twelve year contract, Fenix created and launched their own fashion brand Anteprima in the high-end market. Keung and Ogino realized that an increasing demand existed for high- end fashion designer labels to compliment a trendy modern lifestyle for upscale consumers and they capitalized on that assumption and made their own brand a top selling product in Hong Kong and Japan.
Additionally, Prada assisted the Fenix in establishing their niche market in the high – end market by assisting them with the production and design of their products since they lacked the inside expertise. Eventually with the growth of the Prada brand, the arrangement was discontinued and Fenix invested it its own design and production facility in Italy to continue the Anteprima line of brand products.
General Merchansing Retailing Niche Market At the 10th Hong Kong Forum in 2009, Keung made the statement that “change is forever”. With this motto the Fenix Group was able to identify yet another untouched niche market which re-inforced their standings as a multinational network of knitwear manufacturing and fashion retailing. Identifying its target customers as ‘cosmopolitan advocates’ and capitalizing on customers perceived value of a trendy and modern lifestlye the company went head on into creating a mega city store which tranformed the traditional grocery shopping experience into buying at leisure experience buy offering high – end quality products from around the world.
What does it take to be successful in a niche market? Niche markets are an attractive opportunity available to small businesses that are forced to compete against the scale economies that larger competitors are able to achieve (Kotler, 2012). The choice to pursue a niche marketing strategy will not guarantee success, and, similar to any business decision, requires critical assessment. Fenix entrepreneurs had a bold vision of where they wanted the company to go. Utilizing local market, external resources and knowledge gained from working in the manufacturing and retailing industries the company was able to be successful.
Identify segment and target markets According to Angelo Biasi, General Manager of SMART Marketing Solutions, LLC, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. Fenix niche marketing segment can be classified as psychographic segmentation where buyers are divided into different groups on the basis of psychlogical traits, lifestyle or values. Fenix catered to innovators who are successful, upsacle, sophisticated, active, take – charge people with high self estem who wants to make a statement of what they carried and wore.
Kotler described psychographics as the science of using psychology and demographics to better understand consumers. Based on previous knowledge and experience gained in past business ventures, Keung and Ogino was able to developed a deeper understanding of their target customers needs and wants. In line with the modern, trendy lifestlyle that high- end consumers were in pursuit of, Fenix created products that resonated with superior quality, premium products, trendy/classy fashion, luxury, style, sophistication and seduction.
Branding Another key to successful niche marketing is to branding. The American Marketing Association (AMA) defines a brand as a “name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers. For the Fenix Group, branding played an important role in strategically positioning the company in the high-end market.
The transition from a Original Equipment Manufacture (OEM) to Original Branding Manufacture (OBM) allowed the company to acquire crucial knowledge and skills in branding, design and international marketing. Keung mentioned at the Hong Kong Forum that “branding is the future” of the the company if it wants to retain its competitive advantage. Engaging in brand retailing locally and internationally provided Fenix with many opportunities to acquire connections and exposure that helped the company to achieve a better understanding of high- end consumers markets.They have been succesful in connecting with their target prospects and their need for a modern lifestyle by presenting the brand image as Italian fashion which has a reputation of high quality products , good workmanship and is one of the leader in the fashion and design industry.
Create marketing personas for each targeted niche To get a better understanding of prospects, develop different marketing personas for each different segment. In a niche environment, it is important to keep abreast of new market trends and create innovative products to meet consumer distinct set of needs.
What are the critical success factors of Fenix’s multi niche strategy?
Fenix ability to identify niche markets along with management’s unique and innovative vision allowed the company to progress from multiple brand retailing to creation of knitwear brand labels for local markets to franchise retailing of international brands, which eventually led to the creation of their own high- end brand, Anteprima. With Ogino market expertise in the Japanese market and Keung local connections and experience in Hong Kong, the company was able to succeed in each niche market that had under-served market needs.
Fenix strengthened its competitive advantage in retailing and marketing management by using experience and knowledge gained through trial and error and past business ventures. Especially key to the company entry into the high-end fashion and retailing business was the partnership with Prada and other known European brands such as Armani and MaxMara. This opportunity provided them with valuable information on customers buying patterns.
In targeting upscale clientele, the company brand positioning was focus on creating products that were stylish, simple yet sophisticated and most of all trendy and modern. According to Keung, first-class designers were employed and staff did hand woven knitwear with special skills in knitting and embroidery. Using materials from Italy to make knitwear products combined with a Japanese creativity in fashion created a perceived value of superior quality to prospects.
Fenix commitment from to top managers to continuously seek out new niche markets that are in line with its philosophy coupled with the idea to diversify and add value to its niche market was a resounding success. After the fashion-retailing venture the group identified that upscale consumers quest for a modern, stylish lifestyle was not only limited to high-end fashion but also extended to high- end products and services.
The partnership with Seibu department store allowed Fenix to enjoy the successes of creating another high- value added niche market that was positioned to satisfy its high-end customers taste, preferences, needs and wants. The concept of City’ super is to make the shopping experience one of leisure and not a necessity. The exotic blend of gourmet food and produce imported to order coupled with personalized products and services such as valet parking, e-cards and home delivery are all characteristics that appealed to Fenix targeted upscale customers. The differentiated array of products, exotic imports along with management clear understanding of its target market and its customers have no doubted contributed to the success of the Fenix Group.
In addition to Fenix leverage on competitive advantage, seeking out new markets and adding value to it niche market the company enjoyed the benefits of having a decentralized organization structure where each group was tasked with the responsibility of serving their own niche markets.