Imagine you have an idea for a product or service in an industry thatâ€™s dominated by a giant company. As a start-up, you canâ€™t win a face-to-face battle; but if you can figure a niche that will grow the market and not be critical to the giantâ€™s success, you can grow into a profitable company and coexist.
SmartCEO recently featured an analysis of how Herrâ€™s competes within the snack food industry. In the early years, snack food growth was very steep â€“double digits. Today itâ€™s matured and there are lots of larger companies due to consolidation. There are about 500 companies in this $30 Billion industry; Frito-Lay is the largest at $11 Billion. Today, Jim Herr and his wifeâ€™s does about $250 Million.
The two keys to their success are:
- A strong focus on identifying customer preferences so they can cater to segments with niche products (e.g., chips, crisps, popcorn and pretzels etc.) that are Â large enough to be profitable, but not so large as to be a priority for the giant. Â This leads to a commitment to be â€œthe flavor-chip companyâ€ which researches new flavors and produces them in small batches to see they actually do meet market demands.
- A relentless commitment to productivity â€“ always figuring out how to get more efficient and get more product for the labor, in order to be competitive with larger firms who have greater scales of economy.
These approaches work for Herr and work for many other smaller companies committed to thriving in larger industries.Â Think of the companies you know who fit this description: what are their two main keys to success?Â Share them with us!