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Evan Davis on... market position

Updated Friday 3rd July 2009

After The Bottom Line looked at markets, Evan Davis explained why success can depend on a careful consideration of market position.

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It’s an interesting and an ancient question business as to whether it’s better to be a niche player or a broad one. Now a famous academic, Michael Porter, said you want to be either, you want to be very mass market or very niche but you really don’t want to be stuck in the middle.

I think the truth is actually a little more complicated then that. It’s like this: if a market is fairly monopolistic, if there aren’t that many of you out there, the best thing is to be pretty mass market. If there’s only one newspaper in town, better make it fairly broad spectrum, a little bit for the secretaries, a little bit for the executives, some astrology, some share tips.

A little bit of everything because everyone will want to have something in there and you’ll probably sell to everybody. If the market splinters into lots and lots of competitors, that’s when people start having to adopt niche strategies.

Why? Because there’s no point in being everybody’s second favourite newspaper if they’ve got one targeted at them which is there first preference newspaper. So the point is that as markets become splintered the correct strategy becomes more niche.

An interesting example of where I think you see that is in satellite television. When there were four channels they were all fairly broad brush, they had their different positions and different images but they were fairly broad brush.

As we’ve got more and more channels, bar the terrestrial channels you find incredibly specialist channels out there, there are no really mass market broad spectrum digital multichannel TV channels out there on your Sky dish. And that’s not because the concept has disappeared or because we do it differently, it’s because when markets become full of many, many different players the optimal strategy changes.

That’s my opinion, you can join the debate at the Open University.

 

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