Dominate a niche, then duplicate it

It’s hardly a secret that in the modern world, the best way to launch or grow a business is to work in a niche. After all, by definition a niche is a focused, targetable portion of a market where there is an unmet need a business can meet.

It’s business 101, wrapped up in the tech business mantra that the new-company growth path is to “identify a niche, penetrate that niche, dominate that niche, and then duplicate that niche.”

Yet countless entrepreneurs don’t heed this wisdom and insist on working in markets that are crowded with competitors.

In some cases, that might be because they have superior products or services, but for the most part it’s because they are afraid to give up some potential business, too lazy to do the right market research, or are simply unimaginative. Their reasoning is that if a product or service worked for someone else, it should work for them too, with the bonus that they won’t have to build a market.

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If your methodology is to offer the lowest price, or you have the firepower to dominate a large niche crowded with competitors, then go ahead, take a chance. Or, if your aim is only to be such a source of annoyance that a bigger company will buy you up to eliminate the competition, you may get lucky and eventually arrive at some kind of payday.

But more than likely you’ll be squashed by superior and more established companies. You don’t go elephant hunting with a pistol.

Instead, for a good example of better niche methodology, Toronto-based Green Owl Mobile might be illustrative. Green Owl discovered a strong niche by targeting city commuters and drivers and serving them by bringing the old radio traffic alert into the modern age.

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Through crowdsourcing, Green Owl’s TrafficAlert app provides reporting on traffic hotspots around Toronto (and Buffalo, Boston and Vancouver). But it does it via the driver’s smart phone — “talking” to the driver so he or she isn’t breaking any laws by viewing the device while driving.

That’s innovative in itself, but the real secret sauce in TrafficAlert is that it’s customized to each driver’s route. While including GPS-based vocal directions on general and well-travelled routes such as from downtowns to airports, the software also records and monitors each driver’s daily commute to work, or day care, or any other repeated travel route.

Once a driver has entered a route into the app, it will continuously alert him or her to trouble spots on that route, and provide alternative routes that will shorten the driving time. This is far more useful to drivers than generic traffic reports about tie-ups in popular areas. To make the app even more popular, it is free.

“It’s like having your own personal traffic helicopter,” says Mark Bridges, Green Owl Mobile partner. “But it’s not a navigation tool; it’s a personal traffic reporter, which you need much more. Ninety per cent of the time when you’re in your car, you know where you’re going.”

Green Owl was started in 2010 by technology and business veterans Matt Man and Rishi Khanna — “a classic Starbucks Startup,” Bridges says. But he points out that the company sees itself more as a media operation than a technology company, especially because its revenue model is based on advertising and partnering.

“There are plenty of traffic related tools out there,” Bridges says, explaining how the company found its niche. “But they’re all visual, which is a problem when you’re driving. Our differentiation is audio, and we’re doing all sorts of other things around that as well. For example, we now have voice search for traffic reports.”

Tony Wanless, of Knowpreneur Consultants (knowpreneur.net), is a certified management consultant who helps knowledge-based businesses with strategy, innovation and planning.

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