Innovating in a niche market often does not seem very profitable… Why embark on such an enterprise in these conditions?
Innovating in a niche can be part of a dual process.
- Starting niches give you the means to build on your know-how and solidify your business model whilst taking few risks. Furthermore you are shielded from those powerful competitors that find the niche too small to be noteworthy.
See also: Disruptive innovation is actually a low-risk strategy
Innovating in the face of a more powerful competition
- Technologies grow in quality, functionality and cost. New applications emerge that allow for new opportunities for innovation.
- In the end, you switch from a niche market to a much bigger market…
Disruptive innovation: the takeoff of Facebook explained
Innovating in a small market : the Air Liquide case
Air Liquide is a constructor of hydrogen fuel cells. The technology behind them provides a longer battery life-span than ordinary batteries and generators. It solves the problem of storing electricity and it flattens peaks in consumption. It solves the problem of faulty electrical networks.
The potential market for fuel cells is enormous. In developing countries they can bring a solution to the unrelenting growth in energy needs. In developed countries they provide green energy.
Why not launch on the sector’s main market ?
Air liquide is present on the antenna and mobile telephone market in western India (in partnership with Bharti Airtel) and on the hydrogen-powered forklift market. Why does Air Liquide start with such small markets, when compared with other businesses ? Why doesn’t it target bigger markets directly ?
Because these first uses of Air Liquide’s products allow it to become a reference in these niche markets. It can then improve on its technological know-how and consolidate its relationship with its partners and clients. It will soon be ready to penetrate the main markets on a global scale.2 important pieces of advice:
- If you come across a niche market, do not ignore it! It can be a driver of enormous unsuspected potential! The key is to know how to detect it and assess its potential…
- If you discover a new technology or product and you are already aware of its huge potential, do not launch it in the main markets: you will be crushed by more powerful competitors. Launch it in a neglected niche market… You can then use this small market as a springboard!