This weekend I’ll be traveling to Tampa for the Super Bowl. My husband is a huge Arizona Cardinal fan and this is for sure a once in a lifetime experience, who knows when the Cardinals will go to the Super Bowl again. Probably never. Now, we have always had a tough time finding Cardinal gear in general and the Super Bowl hype helps a tiny bit. For instance, at our local sports store, we can now purchase a Super Bowl Cardinal hat and Super Bowl Cardinal and Steelers t-shirt. But it just doesn’t seem like enough. How come sports stores do not have embrace the less profitable “Underdogs”? Well maybe the word unprofitable throws it off, but I would say that there is the long-tail effect going on. There are tons of professional sports teams that have a smaller following, but when they see items that have their team name on it, they will fork out the dough. Why not have a sports store that only sells “Underdog” gear?
A related topic is on niche markets. When do you decide to tap into a niche market? Well, if you have a portfolio of products, you should consider playing in the niche market to have presence. An example is Levis. I did an MBA school project on high-end jeans. Levis is definitely not the company when you think of high-end jeans, you will probably think of True Religion, Seven, or Rock & Republic to name a few. One executive from Levis said that the reason they play in the high-end (niche) market was to have presence. They could not afford not to play in that market although it was not the most profitable market for them.
So what if you only have one product that is in a niche market? If you consider the simple formula = sell price of product * quanity, then you want to be sure that either the sell price of the product is high enough and/or your quantity is high enough in order to sustain your business operations. The luxury market is sell a few, but charge a ton for each. Also something to think about, would your competitor that has a portfolio of products want to play in your niche market. Can they do so without confusing their customers? Does it make sense for Mercedes Benz to have a car that competes with a Volkswagon Beetle? Probably not.