How Nearly Going Broke Taught Me The Value Of Niche Marketing
If you want to learn how effective Niche Marketing can be,
I suggest you "don't" take the route I did. Back in 1983 I started a company offering general
Electronics Subcontract Assembly services to just about
anyone who made Electronic products. By 1985 my company was teetering on the brink of bankruptcy
and I was perilously close to losing my home because of a
large overdraft pledged against it. Why did this happen? Well Electronics Subcontract Assembly is a huge, highly
competitive market place with lots of heavy hitters. Being
a little naive at the time, I thought that my little three
man company could carve out a big enough slice from such a
huge market to make a very comfortable living - I was dead
wrong. We did get work, but only the jobs the big boys didn't
want. The work was labour intensive and even with our tiny
overhead we couldn't make enough profit to sustain the
business adequately. We could never get the big, lucrative
contracts because we weren't considered big enough to
handle them. By December '84 I was desperate. Sales for the previous
four months had been abysmal and cashflow almost non-
existent. My Bank Manager was on my back demanding that I
reduce the business overdraft or he would call it in. My
suppliers were baying at my door to be paid. As if that
wasn't bad enough, during the first week of 1985 my biggest
customer suspended production for six months on a games
gizmo we were making for him. Things were so bad I was seriously considering bankruptcy
to get out from under this financial nightmare. Fortunately
I'm a bit pig headed about giving in too easily so despite
all the problems I hung on, and I'm glad I did because
fortune suddenly smiled on me. What happened? A couple of weeks into 1985 a business acquaintance came to
see us with a sample cable and asked if we could make 5 up
for him. The cable was for an IBM PC. At the time I knew
nothing about making cables and even less about PCs, but I
had his sample to work from so I took the job. When our now customer came to collect his finished order,
he mentioned that there were a few other Dealers in the PC
market who would probably be interested in having us supply
them with these cables - he even gave us a mailing list. I was more than a little sceptical, I have to admit, but I
had nothing to lose so I went for it. I wrote a short,
snappy sales letter, scraped together the money, mailed out
to the 100+ dealers on the list and crossed my fingers. 48 hours later we had our first order for 10 cables, within
7 days we had 11 more orders for 10 cables each. That one small mailing brought us an amazing 12% initial
response - and it just kept going from there with week
after week of repeat orders. Pretty soon after that, my wife Maxine joined the business
and set up a telephone sales desk and customer service
system. By that time we were averaging about £1000 a week
and that was from just the one cable type. At that point I dumped the subcontract work and focussed on
the cable business. Once Maxine took over the sales function she immediately
followed up with the companies who hadn't responded to our
initial mailing. That brought in another 26 new customers.
Within six months we were supplying most of the major
Dealers and Distributors in the then burgeoning PC market
and our cable sales had quadrupled. Inside a year in this niche business we were selling
thousands of computer cables of all descriptions, including
highly lucrative custom formats, and we were being asked to
provide advice on how to design cables for specific
applications - we had arrived - we were now the
acknowledged experts - customer loyalty rocketed and by 1988
our turnover reached £400,000+ with gross profits of 50% or
more. Now I'm the first to admit that luck played a hand in
turning my company's fortunes around, but the experience
taught me my most valuable lesson in business - you have to
focus on a specific, under-served market niche if you want
to be really successful in business. I have applied this premise to four other businesses since
then and, with one exception, all have been successful. My advice? Find yourself a small, focused market niche (the
Internet is full of them) where you can carve a reputation
for yourself and become an expert in the field - like I
did. Copyright © 2005, André Anthony Niche Market Know-How André Anthony owns and operates Niche Market Know-How a
resource for beginning Niche Marketers. Visit
http://www.nichemarketknowhow.com today to find strategies,
tips, tools, products and resources for effective niche
product creation and marketing. Get his Niche Market
Know-how Mini Course here:
http://www.nichemarketknowhow.com/course.htm
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