Thursday, August 08, 2019

Niche Where Once Was Mass

A common chestnut among entrepreneurs is the advisory issued in the late nineteenth century, in which the Commissioner of the United States Patent Office, Charles Holland Duell, remarked that the office might as well be closed because "everything that can be invented has been invented."  That was then. This is now.  In my own lifetime, I've watched the number of patents issued explode. My own patent was tagged in the low two millions. Today, that number is multiple times that and climbing.

Times change. People change. Markets change. But very often, people miss the bigger picture, ignoring the fact that just as often, market dynamics change. Beyond products and services being invented or growing obsolete is a nuanced observation about the forces and behaviors that goes almost unnoticed.

Most people, for example, are somewhat familiar with the evolution of the mass market economy. Prior to the industrial revolution, most products were built by hand. The advent of machinery allowed more goods and services to be made more plentiful at lower costs, which spurred their consumption and created even more markets for goods and services.

That's pretty much the story from the mid-nineteenth century to the near mid-twentieth century, at which time a larger population, along with industrial and informational advances, took economic prosperity to the next level: mass production. After the second world war, everything from breakfast cereals to television sets to three bedroom tract homes were mass produced in huge quantities. Everything was more affordable for more people. And for the next half century, that's how it stayed.

With the new millennium, however, there was a subtle shift in the dynamics of the mass market economy. The rapid acceleration of information technology, coupled with the unprecedented reach of the internet, radically reshaped market dynamics with all but a very few people noticing.  That shift could well be called the birth of the Super Mass Market -- and it's not at all what you might think.

The Super Mass Market is one in which only a very few players can live. In essence, the entity grows so large and so quickly that it rapidly dominates and eliminates its competition. You know their names: Amazon, Google, Facebook, Apple, Microsoft -- the usual suspects. Brands in the Super Mass Market like to preen themselves over their abundance of granular data about anything and anyone, allowing them to manage and manipulate just about any market they choose.  They seem insurmountable, but I'm here to tell you that they are not.

Just as the Super Mass Market ascended to its heights, another dynamic evolved right behind it, in which niche players leveraged their lack of size and reach to their own advantage.  Don't get me wrong, these are not your grandfather's niche players.  These are Super Niche entities who dwarf the old notion of niche marketers.  Yes, they're smaller than Super Mass Marketers, but they're far larger than the Mom and Pops of old.  Where they are alike is in their understanding they've no need to conquer the world -- just their own little corner of it.

While the Super Mass Marketers are all headed over the cliff (overgrowth, mismanagement, anti-trust and new legislation/regulation is not too far off), the less-heralded Super Niches are quietly avoiding the media's scrutiny, rejoicing in the Super Mass Marketers' stealing the spotlight and drawing the media's fire. The Super Niches run cleaner and leaner, too, making them more profitable investments as they avoid the risks of their larger brothers' bloat. They're not difficult to spot if you know where to look.

Back in the 1950s, the word to the wise was to "think big."  That's still valid.  Big is beautiful. Just don't overdo it.


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