No one strategy is best for all companies. Each company must determine what makes the most sense given its position in the industry and its objectives, opportunities, and resources. Even within a company, different strategies may be required for different businesses or products. Johnson & Johnson uses one marketing strategy for its leading brands in stable consumer markets, such as BAND-AID, Tylenol, Listerine, or J&J’s baby products, and a different marketing strategy for its high-tech health-care businesses and products, such as Monocryl surgical sutures or NeuFlex finger joint implants.

Companies also differ in how they approach the strategy-planning process. Many large firms develop formal competitive marketing strategies and implement them religiously. However, other companies develop strategy in a less formal and orderly fashion. Some companies, such as Harley-Davidson, Red Bull, and Shinola, succeed by breaking many of the rules of marketing strategy. Such companies don’t operate large marketing departments, conduct expensive marketing research, spell out elaborate competitive strategies, and spend huge sums on advertising. Instead, they sketch out strategies on the fly, stretch their limited resources, live close to their customers, and create more satisfying solutions to customer needs. They form buyers’ clubs, use buzz marketing, engage customers up close, and focus on winning customer loyalty. It seems that not all marketing must follow in the footsteps of marketing giants such as P&G, McDonald’s, and Microsoft.

In fact, approaches to marketing strategy and practice often pass through three stages—entrepreneurial marketing, formulated marketing, and intrapreneurial marketing:

• Entrepreneurial marketing. Most companies are started by individuals who live by their wits. They visualize an opportunity, construct flexible strategies on the backs of envelopes, and knock on every door to gain attention. Jim Koch, founder of Boston Beer Company, whose Samuel Adams Boston Lager beer has become the top-selling craft beer in America, started out in 1984 brewing a cherished family beer recipe in his kitchen. For marketing, Koch carried bottles of Samuel Adams in a suitcase from bar to bar, telling his story, educating consumers about brewing quality and ingredients, getting people to taste the beer, and persuading bartenders to carry it. For 10 years, he couldn’t afford advertising; he sold his beer through direct selling and grassroots public relations. “It was all guerilla marketing,” says Koch. “The big guys were so big, we had to do innovative things like that.” Today, however, his business pulls in more than $1 billion a year, making it the leader over more than 1,000 competitors in the craft brewery market.9

• Formulated marketing. As small companies achieve success, they inevitably move toward more-formulated marketing. They develop formal marketing strategies and adhere to them closely. Boston Beer now employs a large sales force and has a marketing department that carries out market research and plans strategy. Although Boston Beer is far less formal and sophisticated in its strategy than $43-billion mega-competitor Anheuser-Busch Inbev, it has adopted some of the tools used in professionally run marketing companies.

• Intrapreneurial marketing. Many large and mature companies get stuck in formulated marketing. They pore over the latest Nielsen numbers, scan market research reports, and try to fine-tune their competitive strategies and programs. These companies sometimes lose the marketing creativity and passion they had at the start. They now need to build more marketing initiative and “intrapreneurship”—encouraging employees to be more entrepreneurial within the larger corporation—recapturing some of the spirit and action that made them successful in the first place.

Some companies build intrapreneurship into their core marketing operations. For example, IBM encourages employees at all levels to interact on their own with customers through blogs, social media, and other platforms. Google’s Innovation Time-Off program encourages all of its engineers and developers to spend 20 percent of their time developing “cool and wacky” new product ideas—blockbusters such as Google News, Gmail, Google Maps, and AdSense are just a few of the resulting products. And Facebook sponsors regular “hackathons,” during which it encourages internal teams to come up with and present intrapreneurial ideas. One of the most important innovations in the company’s history—the “Like button”—resulted from such a hackathon.10

The bottom line is that there are many approaches to developing effective competitive marketing strategies. There will be a constant tension between the formulated side of marketing and the creative side. It is easier to learn the formulated side of marketing, which has occupied most of our attention in this book. But we have also seen how marketing creativity and passion in the strategies of many of the companies studied—whether small or large, new or mature—have helped to build and maintain success in the marketplace. With this in mind, we now look at the broad competitive marketing strategies companies can use.

More than three decades ago, Michael Porter suggested four basic competitive positioning strategies that companies can follow—three winning strategies and one losing one.11 The three winning strategies are as follows:

• Overall cost leadership. Here the company works hard to achieve the lowest production and distribution costs. Low costs let the company price lower than its competitors and win a large market share. Walmart, Lenovo, and Spirit Airlines are leading practitioners of this strategy.

• Differentiation. Here the company concentrates on creating a highly differentiated product line and marketing program so that it comes across as the class leader in the industry. Most customers would prefer to own this brand if its price is not too high. Nike and Caterpillar follow this strategy in apparel and heavy construction equipment, respectively.

• Focus. Here the company focuses its effort on serving a few market segments well rather than going after the whole market. For example, Ritz-Carlton focuses on the top 5 percent of corporate and leisure travelers. Bose concentrates on very high-quality electronics products that produce better sound. Hohner owns a stunning 85 percent of the harmonica market.

Companies that pursue a clear strategy—one of the above—will likely perform well. The firm that carries out that strategy best will make the most profits. But firms that do not pursue a clear strategy—middle-of-the-roaders—do the worst. Sears, Levi-Strauss, and Holiday Inn encountered difficult times because they did not stand out as the lowest in cost, highest in perceived value, or best in serving some market segment. Middle-of-the-roaders try to be good on all strategic counts but end up being not very good at anything.

Two marketing consultants, Michael Treacy and Fred Wiersema, offer a more customer-centered classification of competitive marketing strategies.12 They suggest that companies gain leadership positions by delivering superior value to their customers. Companies can pursue any of three strategies—called value disciplines—for delivering superior customer value:

• Operational excellence. The company provides superior value by leading its industry in price and convenience. It works to reduce costs and create a lean and efficient value delivery system. It serves customers who want reliable, good-quality products or services but want them cheaply and easily. Examples include Walmart, IKEA, Zara, and Southwest Airlines.

• Customer intimacy. The company provides superior value by precisely segmenting its markets and tailoring its products or services to exactly match the needs of targeted customers. It specializes in satisfying unique customer needs through a close relationship with and intimate knowledge of the customer. It empowers its people to respond quickly to customer needs. Customer-intimate companies serve customers who are willing to pay a premium to get precisely what they want. They will do almost anything to build long-term customer loyalty and to capture customer lifetime value. For example, retailer Nordstrom is a customer-intimacy all-star that’s obsessed with “Taking care of customers no matter what it takes” (see Real Marketing 18.2). Other companies that practice customer intimacy include Lexus, Zappos, L.L. Bean, and Ritz-Carlton hotels.

• Product leadership. The company provides superior value by offering a continuous stream of leading-edge products or services. It aims to make its own and competing products obsolete. Product leaders are open to new ideas, relentlessly pursue new solutions, and work to get new products to market quickly. They serve customers who want state-of-the-art products and services regardless of the costs in terms of price or inconvenience. One example of a product leader is Tesla Motors:13

A Tesla automobile—any model—doesn’t come cheap, and you’ll have to wait a while to get one. But it’s the ultimate in cutting-edge electric vehicles. The Tesla Model S goes from 0 to 60 in under 3 seconds when driven in “Ludicrous Mode” and offers a host of innovative features, such as retractable door handles, a 17-inch touchscreen, a sound system that rivals a recording studio, and a host of safety features. Best of all: It needs no oil changes and has no gas tank to fill. The Tesla Model X crossover SUV even features futuristic falcon-wing doors.

Tesla’s product leadership has sparked the imaginations of people who want to stay ahead of the curve in auto ownership. For example, within only days of unveiling the more affordable yet still incredibly stylish $35,000 Tesla Model 3, Tesla was swamped with 400,000 reservation deposits of $1,000, even though the cars wouldn’t be delivered for a year or more. Auto research site Edwards sums it up this way: “Tesla has found success not because they built an electric vehicle, but because they built a sports car that happens to have an innovative electric powertrain. It is a vehicle that customers love.”

Some companies successfully pursue more than one value discipline at the same time. For example, FedEx excels at both operational excellence and customer intimacy. However, such companies are rare; few firms can be the best at more than one of these disciplines. By trying to be good at all value disciplines, a company usually ends up being best at none.

Thus, most excellent companies focus on and excel at a single value discipline while meeting industry standards on the other two. Such companies design their entire value delivery network to single-mindedly support the chosen discipline. For example, Walmart knows that customer intimacy and product leadership are important. Compared with other discounters, it offers good customer service and an excellent product assortment. Still, it purposely offers less customer service and less product depth than does Nordstrom or Williams-Sonoma, which pursue customer intimacy. Instead, Walmart focuses obsessively on operational excellence—on reducing costs and streamlining its order-to-delivery process to make it convenient for customers to buy just the right products at the lowest prices.

By the same token, Equinox Fitness Clubs wants to be efficient and employ the latest operations technologies. But what really sets the luxury gym apart is its customer intimacy. Equinox coddles its customers with an app to sign up for classes ahead of time, refrigerated eucalyptus towels, and Kiehl’s products in the locker rooms. In addition, each location has a spa and snack bar filled with organic selections. “Epic workouts demand unexpected luxuries. Exclusive Kiehl’s products. Eco-chic amenities. Spaces that inspire and ignite,” says Equinox. “Equinox isn’t just a fitness club, it’s a temple of well-being. It’s not fitness. It’s life.”

Classifying competitive strategies as value disciplines is appealing. It defines marketing strategy in terms of the single-minded pursuit of delivering superior value to customers. Each value discipline defines a specific way to build lasting customer relationships.

Firms competing in a given target market at any point in time differ in their objectives and resources. Some firms are large; others are small. Some have many resources; others are strapped for funds. Some are mature and established; others new and fresh. Some strive for rapid market share growth; others for long-term profits. And these firms occupy different competitive positions in the target market.

We now examine competitive strategies based on the roles firms play in the target market—leader, challenger, follower, or nicher. Suppose that an industry contains the firms shown in Figure 18.2. As you can see, 40 percent of the market is in the hands of the market leader, the firm with the largest market share. Another 30 percent is in the hands of market challengers, runner-up firms that are fighting hard to increase their market share. Another 20 percent is in the hands of market followers, other runner-up firms that want to hold their share without rocking the boat. The remaining 10 percent is in the hands of market nichers, firms that serve small segments not being pursued by other firms.

Figure 18.2

Competitive Market Positions and Roles

Table 18.1 shows specific marketing strategies that are available to market leaders, challengers, followers, and nichers.14 Remember, however, that these classifications often do not apply to a whole company but only to its position in a specific industry. Large companies such as GE, Microsoft, Google, P&G, or Disney might be leaders in some markets and nichers in others. For example, Amazon leads the online retailing market but challenges Apple and Samsung in smartphones and tablets. P&G leads in many segments, such as laundry detergents and shampoo, but it challenges Unilever in hand soaps and Kimberly-Clark in facial tissues. Such companies often use different strategies for different business units or products, depending on the competitive situations of each.

Table 18.1

Strategies for Market Leaders, Challengers, Followers, and Nichers

Most industries contain an acknowledged market leader. The leader has the largest market share and usually leads the other firms in price changes, new product introductions, distribution coverage, and promotion spending. The leader may or may not be admired or respected, but other firms concede its dominance. Competitors focus on the leader as a company to challenge, imitate, or avoid. Some of the best-known market leaders are Walmart (retailing), Amazon (online retailing), McDonald’s (fast food), Verizon (wireless), Coca-Cola (beverages), Caterpillar (earth-moving equipment), Nike (athletic footwear and apparel), Facebook (social media), and Google (internet search).

A leader’s life is not easy. It must maintain a constant watch. Other firms keep challenging its strengths or trying to take advantage of its weaknesses. The market leader can easily miss a turn in the market and plunge into second or third place. A product innovation may come along and hurt the leader (as when Netflix’s direct marketing and video streaming unseated then-market leader Blockbuster or when Apple developed the iPod and iTunes and took the market lead from Sony’s Walkman portable audio devices). The leader might grow arrogant or complacent and misjudge the competition (as when Sears lost its lead to Walmart). Or the leader might look old-fashioned against new and peppier rivals (as when Abercrombie & Fitch lost ground to stylish or lower-cost brands such as Zara, H&M, and Forever 21).

To remain number one, leading firms can take any of three actions. First, they can find ways to expand total demand. Second, they can protect their current market share through good defensive and offensive actions. Third, they can try to expand their market share further, even if market size remains constant.

Expanding Total Demand

The leading firm normally gains the most when the total market expands. If Americans eat more fast food, McDonald’s stands to gain the most because it holds a much larger fast-food market share than competitors such as Subway, Burger King, or Taco Bell. If McDonald’s can convince more Americans that fast food is the best eating-out choice, it will benefit more than its competitors.

Market leaders can expand the market by developing new users, new uses, and more usage of its products. They usually can find new users or untapped market segments in many places. For example, traditionally boy-focused LEGOs—the world’s biggest ­toymaker—now successfully targets girls. Based on extensive research into differences between how boys and girls play, in 2011 the company introduced the LEGO Friends line for girls. The line features pastel color bricks and construction sets that encourage girls to build everything from Olivia’s House or Emma’s Pet Salon to Andrea’s City Park Café. LEGO Friends has become one of the most successful lines in LEGO history, helping to triple LEGO’s sales to girls within only one year. Last year alone, sales of the Friends line were up 30 percent over the previous year.15

Marketers can expand markets by discovering and promoting new uses for the product. For example, The WD-40 Company’s knack for expanding the market by finding new uses has made this popular substance one of the truly essential survival items in most American homes:16

18.2-12 Full Alternative Text

Some years ago, the company launched a search to uncover 2,000 unique uses for WD-40. After receiving 300,000 individual submissions, it narrowed the list to the best 2,000, which are now posted on the company’s website. Some consumers suggested simple and practical uses, such as keeping wicker chairs from squeaking, freeing stuck LEGO bricks, or cleaning crayon marks from just about anywhere. And, it seems, lots of people use WD-40 to make squirrels slide off birdfeeder poles. Others, however, reported some pretty unusual applications. One man uses WD-40 to polish his glass eye; another uses it to remove a prosthetic leg. A bus driver in Asia used WD-40 to remove a python that had coiled itself around the undercarriage of his vehicle. And did you hear about the nude burglary suspect who had wedged himself in a vent at a café in Denver? The fire department extracted him with a large dose of WD-40. Or how about the Mississippi naval officer who used WD-40 to repel an angry bear? Then there’s the college student who wrote to say that a friend’s nightly amorous activities in the next room were causing everyone in his dorm to lose sleep—he solved the problem by treating the squeaky bedsprings with WD-40. As the company concludes: “You often hear it said, ‘You only need two things in life: duct tape and WD-40. If it moves and shouldn’t, use duct tape. If it doesn’t move and should, use WD-40.’ Surely there’s a reason for that.”

Finally, market leaders can encourage more usage by convincing people to use the product more often or use more per occasion. For example, Campbell’s urges people to eat soup and other Campbell’s products more often by running ads containing new recipes. At the Campbell’s Kitchen website (www.campbellskitchen.com), visitors can search for or exchange recipes, create their own personal recipe box, learn ways to eat healthier, and sign up for a daily or weekly Meal Mail program. At the Campbell’s Facebook, Pinterest, and Twitter sites, consumers can join in and share on Campbell’s Kitchen Community conversations.

Protecting Market Share

While trying to expand total market size, the leading firm also must protect its current business against competitors’ attacks. Walmart must constantly guard against Target and Costco; Caterpillar against Komatsu; Apple’s iPad and iPhone against Samsung; and McDonald’s against Wendy’s and Burger King.

What can the market leader do to protect its position? First, it must prevent or fix weaknesses that provide opportunities for competitors. It must always fulfill its value promise and work tirelessly to engage valued customers in strong relationships. Its prices must remain consistent with the value that customers see in the brand. The leader should “plug holes” so that competitors do not jump in.

But the best defense is a good offense, and the best response is continuous innovation. The market leader refuses to be content with the way things are and leads the industry in new products, customer services, distribution effectiveness, promotion, and cost cutting. It keeps increasing its competitive effectiveness and value to customers. And when attacked by challengers, the market leader reacts decisively. For example, in the $53 billion global disposable diaper market, market leader P&G—with its Pampers and Luvs brands—has been relentless in its offense against challengers such as Kimberly-Clark’s Huggies:17

P&G invests huge resources in disposable diaper and baby-care R&D, seeking to build the ultimate diaper that yields “zero leakage, ultimate dryness, ultimate comfort, with an underwear-like fit,” says a P&G baby-care research manager. At five baby-care centers around the globe, P&G’s researchers push the boundaries of science and style to keep a technological edge over challengers. P&G’s baby-care division now has more than 5,000 diaper patents granted or pending. For instance, in 2010 P&G introduced Dry Max Pampers, perhaps the biggest diaper innovation in 25 years—20 percent thinner yet twice as absorbent as before. More recently, it introduced Pamper Premium Care Pants, diapers with all-around elastic that can be pulled on like underwear. Next up in diaper innovation: smart diapers with imbedded sensors that alert parents through smartphone apps when their babies wet a diaper or even notify parents if they detect the wearer catching a disease. Beyond its push for technological superiority, P&G employs its hefty marketing clout to engage consumers and persuade them that its diapers are best for their babies. In all, thanks to its relentless innovation and brand building, in the United States P&G holds a 42.9-percent-and-growing market share versus challenger Kimberly-Clark’s 37 percent. In the huge Chinese diaper market, it holds a 42 percent share to Kimberly Clark’s 11 percent.

Firms that are second, third, or lower in an industry are sometimes quite large, such as PepsiCo, Ford, Lowe’s, Hertz, Target, and AT&T. These runner-up firms can adopt one of two competitive strategies: They can challenge the market leader and other competitors in an aggressive bid for more market share (market challengers), or they can play along with competitors and not rock the boat (market followers).

A market challenger must first define which competitors to challenge and its strategic objective. The challenger can attack the market leader, a high-risk but potentially high-gain strategy. Its goal might be to take over market leadership. Or the challenger’s objective may simply be to wrest more market share.

Although it might seem that the market leader has the most going for it, challengers often have what some strategists call a “second-mover advantage.” The challenger ­observes what has made the market leader successful and improves on it. For example, The Home Depot invented the home-improvement superstore. However, after observing The Home Depot’s success, number-two Lowe’s, with its brighter stores, wider aisles, and arguably more helpful salespeople, has positioned itself as the friendly alternative to Big Bad Orange. Over the past decade, follower Lowe’s has substantially closed the gap in sales and market share with The Home Depot.

In fact, challengers often become market leaders by imitating and improving on the ideas of pioneering processors. For example, McDonald’s first imitated and then mastered the fast-food system first pioneered by White Castle. And founder Sam Walton admitted that Walmart borrowed most of its practices from discount pioneer Sol Price’s FedMart and Price Club chains and then perfected them to become today’s dominant retailer.

Alternatively, the challenger can avoid the leader and instead challenge firms its own size or smaller local and regional firms. These smaller firms may be underfinanced and not serving their customers well. Several of the major beer companies grew to their present size not by challenging large competitors but by gobbling up small local or regional competitors. For example, SABMiller became the world’s number-two brewer by acquiring brands such as Miller, Molson, Coors, and dozens of others. If the challenger goes after a small local company, its objective may be to put that company out of business. The important point remains: The challenger must choose its opponents carefully and have a clearly defined and attainable objective.

How can the market challenger best attack the chosen competitor and achieve its strategic objectives? It may launch a full frontal attack, matching the competitor’s product, advertising, price, and distribution efforts. It attacks the competitor’s strengths rather than its weaknesses. The outcome depends on who has the greater strength and endurance. PepsiCo challenges Coca-Cola in this way, and Ford challenges Toyota frontally.

If the market challenger has fewer resources than the competitor, however, a frontal attack makes little sense. Thus, many new market entrants avoid frontal attacks, knowing that market leaders can head them off with ad blitzes, price wars, and other retaliations. Rather than challenging head-on, the challenger can make an indirect attack on the competitor’s weaknesses or on gaps in the competitor’s market coverage. It can carve out toeholds using tactics that established leaders have trouble responding to or choose to ignore.

For example, consider how challenger Red Bull first entered the U.S. soft drink market against market leaders Coca-Cola and PepsiCo. Red Bull tackled the leaders indirectly by selling a high-priced niche product in nontraditional distribution points. It began by selling Red Bull via unconventional outlets that were under the radar of the market leaders, such as nightclubs and bars where young revelers gulped down their caffeine fix so they could go all night. Once it had built a core customer base, the brand expanded into more traditional outlets, where it now sits within arm’s length of Coke and Pepsi. Finally, Red Bull used a collection of guerilla marketing tactics rather than the high-cost traditional media used by the market leaders. The indirect approach worked for Red Bull. Despite ever-intensifying competition in the United States, Red Bull is now a $6.5 billion brand that captures a 43 percent share of the energy drink market versus a combined energy drink share of about 4 percent for Coca-Cola and Pepsi.19

Not all runner-up companies want to challenge the market leader. The leader never takes challenges lightly. If the challenger’s lure is lower prices, improved service, or additional product features, the market leader can quickly match these to defuse the attack. The leader probably has more staying power in an all-out battle for customers. For example, a few years ago, when Kmart launched its renewed low-price “bluelight special” campaign, directly challenging Walmart’s everyday low prices, it started a price war that it couldn’t win. Walmart had little trouble fending off Kmart’s challenge, leaving Kmart worse off for the attempt. Thus, many firms prefer to follow rather than challenge the market leader.

A follower can gain many advantages. The market leader often bears the huge expenses of developing new products and markets, expanding distribution, and educating the market. By contrast, as with challengers, the market follower can learn from the market leader’s experience. It can copy or improve on the leader’s products and programs, usually with much less investment. Although the follower will probably not overtake the leader, it often can be as profitable.

Following is not the same as being passive or a carbon copy of the market leader. A follower must know how to hold current customers and win a fair share of new ones. It must find the right balance between following closely enough to win customers from the market leader and following at enough of a distance to avoid retaliation. Each follower tries to bring distinctive advantages to its target market—location, services, financing. A follower is often a major target of attack by challengers. Therefore, the market follower must keep its manufacturing costs and prices low or its product quality and services high. It must also enter new markets as they open up.

Almost every industry includes firms that specialize in serving market niches. Instead of pursuing the whole market or even large segments, these firms target subsegments. Nichers are often smaller firms with limited resources. But smaller divisions of larger firms also may pursue niching strategies. Firms with low shares of the total market can be highly successful and profitable through smart niching.

Why is niching profitable? The main reason is that the market nicher ends up knowing the target customer group so well that it meets their needs better than other firms that casually sell to that niche. As a result, the nicher can charge a substantial markup over costs because of the added value. Whereas the mass marketer achieves high volume, the nicher achieves high margins.

Nichers try to find one or more market niches that are safe and profitable. An ideal market niche is big enough to be profitable and has growth potential. It is one that the firm can serve effectively. Perhaps most important, the niche is of little interest to major competitors. And the firm can build the skills and customer goodwill to defend itself against a major competitor as the niche grows and becomes more attractive.

The key idea in niching is specialization. Nichers thrive by meeting in depth the special needs of well-targeted customer groups. For example, when it comes to online dating sites, general sites such as eHarmony.com and Match.com get the most notice. But recently, there’s been an explosion of niche dating sites that focus on the narrower preferences of small but well-defined audiences:20

PURRsonals.com pairs cat lovers—it’s where “cat lovers meet and greet.”SeaCaptainDate.com helps lovers of the ocean “find your first mate.” Faith-focused ChristianMingle.com is “where good people find great relationships.” And TallFriends.com brings tall people nose to nose (there’s even a choice for people taller than 6’11”!). If that’s not nichie enough for you, maybe you need a super-nicher such as GlutenfreeSingles.com, with 4,000 love-seeking gluten-free users. There’s even a dating site for mustache wearers and people who love them (StachePassions.com).

Although some of these niche sites seem a bit extreme, they can be ideal for people who think they know precisely what kind of person they want. For example, FarmersOnly.com serves hundreds of thousands of country-folk members every day seeking like-minded mates with rural persuasions. Farmers Only founder Jerry Miller started the dating site after noticing that the isolated and demanding farming lifestyle makes it hard to find understanding partners. He cites an example in which a country girl and her city boyfriend discussed marriage. Their relationship went to seed when she said that she wanted to raise horses; he said they could keep the horses in the garage. At that point, says Miller, “She knew they were not compatible.” Hence the dating service’s popular tagline: FarmersOnly.com, because “City folks just don’t get it.”

A market nicher can specialize along any of several market, customer, product, or marketing mix lines. For example, it can specialize in serving one type of end user, as when a law firm specializes in the criminal, civil, or business law markets. The nicher can specialize in serving a given customer-size group. Many nichers specialize in serving small and midsize customers who are neglected by the majors.

Some nichers focus on one or a few specific customers, selling their entire output to a single company, such as Walmart or General Motors. Still other nichers specialize by geographic market, selling only in a certain locality, region, or area of the world. For example, Vegemite is primarily sold and consumed in Australia. Quality-price nichers operate at the low or high end of the market. For example, Manolo Blahnik specializes in the high-quality, high-priced women’s shoes. Finally, service nichers offer services not available from other firms. For example, LendingTree provides online lending and realty services, connecting homebuyers and sellers with national networks of mortgage lenders and realtors who compete for the customer’s business. “When lenders compete,” it proclaims, “you win.”

Niching carries some major risks. For example, the market niche may dry up, or it might grow to the point that it attracts larger competitors. That is why many companies practice multiple niching. By developing two or more niches, a company increases its chances for survival. Even some large firms prefer a multiple niche strategy to serving the total market. For example, apparel maker VF Corporation markets more than 30 premium lifestyle brands in niche markets ranging from jeanswear, sportswear, and contemporary styles to outdoor gear and imagewear (workwear). For example, VF’s Vans unit creates footwear, apparel, and accessories for skate-, surf-, and snowboarders. Its 7 for All Mankind brand offers premium denim and accessories sold in boutiques and high-end department stores. The North Face and Timberland brands offer top-of-the-line gear and apparel for outdoor enthusiasts. In contrast, the company’s Red Kap, Bulwark, and Chef Designs workwear brands provide an array of uniforms and protective apparel for businesses and public agencies, whether it’s outfitting a police force or a chef’s crew. Together, these separate niche brands combine to make VF a $12.4-billion apparel powerhouse. No matter who you are, says the company, “We fit your life.”21