The magic of a mass-niche brand positioning

Hello everyone,

Fun fact. Apple has around 25% share of the smartphone market (in phones), 50% of the revenues (in sales), and almost 100% of the profits (in dollars) – well, it was only 85% of the profits in one of the latest reports, but there have been studies that clock Apple at 100%.

That, in a nutshell, is the magic of a mass-niche brand positioning. And, while not everyone can aspire to 100% of their market's profits, there's a lot that elite professional service firms and knowledge-intensive B2B businesses can learn from this.

What is a 'mass-niche' brand positioning? Why is it such a powerful positioning to adopt? And how do you develop one? 

Adopting a mass-niche strategic brand positioning is a potent way for an elite professional services firm or a knowledge-intensive B2B business to stand for something distinctive in a crowded market.

However, identifying a mass-niche brand positioning – as opposed to simply a niche positioning – requires sophisticated market analysis and genuine determination on the part of the firm's leadership team to set and maintain a tight strategic focus.

Apple is the obvious poster child for adopting a mass-niche strategic brand positioning focusing on 'insanely great products'.

Stand for to stand out

The main features of a mass niche brand positioning are:

Firstly, it must be and appear to be extremely focused, with all the accompanying client benefits of specialisation – market-leading expertise, cross-fertilisation of knowledge, and deep experience.

Secondly, the market niche must offer massive innovation, growth, and profitability opportunities. This is the most challenging part: spotting a market opportunity before it fully materialises.

Third, the niche specialism should ideally have perceived halo-effect benefits in the market. i.e., the market is likely to believe that being extremely good at A implies that you will also be excellent at B, C, and D, even if they're not your specialist subject.

A niche doesn't have to be a sector or a discipline, but it does have to exist in the 'mind of the market'; you can't simply imagine it into existence.

Apple is the obvious poster child for adopting a mass-niche strategic brand positioning focusing on 'insanely great products'. Despite being the world's most valuable company, Apple still positions itself as a niche brand. 

Very early on, Apple decided to only focus on the very high end of the markets it operates in. 

That's the niche part. What makes it a mass-niche is that these markets have grown massively over the years, enabling Apple to grow and grow without proliferating products or going downmarket to find more sales. 

The third part, admittedly discovered slowly at first, is that superior design and user experience have a halo effect that Apple can transfer from computers to phones to tablets and watches.

Which niche?

A niche doesn't have to be a sector or a discipline, but it does have to exist in the 'mind of the market'; you can't simply imagine it into existence.

This applies to all brand positioning strategies, but it's essential to take care with a mass-niche concept, not to try to fudge it by leaning on what you do already rather than what the market perceives as credible.

For example, whether fair or not, the market has preconceived ideas about the benefits of 'German engineering' that don't apply to other nationalities. 

'Italian engineering' doesn't have the same credibility as a positioning in the minds of many consumers – even if they buy products made in Italy. 

On the other hand, 'German fashion' doesn't convey the same positive positioning that 'Italian fashion' does.

In real life, it's never simple as this, but the principle is vital to remember when assessing the pros and cons of various mass-niche positionings.

Not many people need an 'ultimate driving machine' to take their kids to school.

Some examples

A quick look at some highly successful mass-niche strategic brand positionings helps illustrate the model.

Tesla's mission is to 'accelerate the world's transition to sustainable energy' – mainly via electric cars. Electric is still a niche, albeit fast-growing, segment of the global car market. 

However, with only around 2% of total car sales, Tesla has achieved a market capitalisation greater than the combined value of the ten biggest car manufacturers, who make up 50% of the global market in sales.

BMW positions itself as 'the ultimate driving machine'. Not many of us need an 'ultimate driving machine' to take the kids to school or commute to work in traffic. But BMW knows that drivers will happily pay for massively and unnecessarily overpowered and over-equipped cars.

Coming closer to home and looking at elite professional service firms and knowledge-intensive B2B businesses, some have developed a powerful mass-niche brand positioning that enables them to stand apart in extremely crowded fields.

McKinsey positions itself as being for 'our clients' most important challenges'. C-Suite executives have always been willing to pay for what is – and is perceived to be – the best strategic advice for their biggest challenges. McKinsey has managed to own this niche positioning better than anyone else, and because every leadership team is likely to identify its most important challenge, this niche is extensive.

The impact will only be driven by changes made at the coalface.

Cooley, a West-Coast law firm, is overtly positioned as a specialist technology firm 'where innovation meets the law'. Technology is only one sector. Still, it's growing exponentially (the mass part) and influencing many other sectors (the halo effect).

Quinn Emanuel, a litigation-only law firm, positions itself exclusively as 'trial lawyers'. This may not seem particularly niche to the casual observer, but the reality of litigation is that very few significant disputes end up in court; they are settled beforehand. However, Quinn Emanuel taps into the idea of 'trial threat' being a significant benefit in the minds of clients facing potentially expensive or damaging litigation, which expands the size of its market beyond the courtroom battles we see in the movies.

PA Consulting's positioning is 'bringing ingenuity to life'. This mass-niche positioning firmly embraces the high-ground capability of innovation that is perceived as the 'pointy end' of many strategic challenges clients face looking to external consultants for advice and expertise.

ARM – the market-leading semiconductor company that doesn't sell a single microprocessor – managed to carve out a hugely valuable mass-niche positioning in the insanely capital-intensive semiconductor market by focusing exclusively on designing chip technology and leaving the manufacturing to others. ARM describes itself as 'the R&D department of the entire semiconductor market', and their technology is found in more than 95% of all smartphones and much of the burgeoning 'Internet of things' market.

Pulling it off

The reason that many organisations are unable to adopt a mass niche strategic brand positioning is partly that the analysis part is tricky. However, it's mainly because the execution part is even more challenging. The impact will only be driven by changes made at the coalface – your client experience, not by what it says on your website.

When adopting a mass-niche positioning, you can't have your cake and eat it. You must commit, or you won't realise the benefits; it's no good being 'a bit focused.' That way, you miss out on the market-facing benefits and must endure the internal friction that any degree of focus automatically attracts.

Less is more seems to be the formula.

That's all for this week.

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