A niche is a subset of a market segment for which a product or service is intended. The product has to satisfy a specific need which may be reflected in its quality or price and is usually targeting a specific demographic group. Niche marketing helps new entrants to survive in a highly competitive environment until they can expand their products and survive in the larger market segment. In this assignment, three products, namely Ferrari, Rolex and Maserati have been discussed.
Ferrari is a company based in Italy, in the city of Maranello. Founded in 1929 by Enzo Ferrari, the company deals in the manufacture of high performance super luxury cars. This Italian automobile manufacturer has blended speed and performance to create exotic and powerful cars that most enthusiasts have described as “super cars”.
Ferrari serves a niche market, and has positioned itself in the prestige segment of the automobile industry. The brand symbolizes extreme performance coupled with design and power. Ferrari has little competition in its target market and individuals with very high income, and an interest in luxury sports cars are the targets. In 2015 just 7000 Ferraris were produced. They believe in exclusivity and it was Enzo Ferrari’s motto to always produce at least one car less than the demand.
STRONG CUSTOMER RELATIONSHIPS
At Ferrari, it is not just customer relationship management, but rather they view their duty as “surprise and delight management” (“Ferrari: why surprise & delight management is more important than CRM”, 2018). Ferrari is a brand driven by passion and emotion, a desire rather than a need. To own a Ferrari is to be part of a family, and at Ferrari, they forge an intimate and closer relationship with their clients. A unique one to one contacts relationship as though the client is the only one they have. Exclusive access to receive the Ferrari magazine, hand signed letters from the president of Ferrari welcoming a client into the family and an invitation to tour the famous factory at Maranello are just a few examples. Ferrari has the honor of twice being voted the Worlds Most Powerful Brand, and view their clients as the most powerful asset.
Ferrari follows a differentiation focus strategy, and employs a Demographic and psychographic segmentation strategy. Its extreme price range is aimed at the ultra-rich, usually global celebrities as they don’t want just anyone to own a Ferrari. Being involved in Formula 1 and sponsoring racing events, it has positioned itself as a luxury sports car, giving it a value based positioning. The competitive advantage lies in its exclusivity and low volume production. In terms of market growth to share, they have achieved the status of stars, which perfectly fits the quality, rarity, exclusivity and the promise of high performance combined with the finest Italian craftsmanship (Bhasin, 2018).
Ferrari went global in October 2015 with its IPO at the New York Stock Exchange and later at the Milan stock exchange. However stability of the company was assured with up to 49 percent of voting rights retained between Ferrari and its former owner Fiat. Its cult following inspired by performance, design and exclusivity coupled with a strong branding and reputation stemming from unmatched quality makes it the desire of the rich and famous, who keep coming for more. With prices upwards of $200,000 and touching millions for special editions there is no cash shortage. Together with a leadership that upholds the company’s vision and traditions, and a dedicated workforce, business stability at Ferrari is assured.
Rolex is a company based in Switzerland dealing in the manufacture of luxury wrist watches. It was founded in in 1905 by Hans Wilsdorf. A powerful global brand associated with luxury and prestige, it was ranked as the 64th most powerful brand in the year 2016. Targeting the affluent and famous, Rolex is the leader in the niche for luxury mechanical wrist watches and a status symbol worldwide.
As is evidenced by a market share of 37% as compared to second place Maurice lacroix with a share of just 12%, it is clear that Rolex is by far the market leader in this niche market.
Figure 0 1 Swiss luxury watches – Manufactured units and market share 2012
Source: Retrieved from http://euro-watch.blogspot.com/2012/11/swiss-luxury-watch-manufacturers-units_30.html
Rolex has used psychographic segmentation to stay abreast of the changing trends of its clientele and to be a step ahead of competition. Exclusively a watch manufacturer, it has a differentiation focus strategy. It has an undifferentiated targeting strategy aimed at individuals of high income. It has a value based positioning strategy, making watches of classic design and symbolizing prestige (Bhasin, 2018). The watches are available through premium channels at exclusive outlets and retail showrooms and this helps to maintain brand image and premium value. Pricing is in the super premium range, the costliest being $ 485,305 for the ‘GMT Ice’ model. It is the official time keeper for Wimbledon and The Australian Open and promotes and several other high profile sporting events. In terms of the BCG matrix, Rolex watches are Stars.
STRONG RELATIONSHIPS WITH CUSTOMERS
The company encourages a personal relationship with its customers and this also endorses its brand image. Apart from being a mere status item, what really makes a Rolex stand out from the rest is that most owners perceive buying one as a gift to themselves. This signifies a very high degree of reputation and a personal relationship that customers have with the brand emotionally. Global reptrak 100 rankings which is the largest study of corporate reputation, ranks brands on factors such as trustworthiness and customers willingness to recommend the brand.
Figure 0 2 Global Reptrak 100 rankings, 2017
Source: Retrieved from https://www.bobswatches.com/rolex-blog/rolex-info/numbers-reputation-popular-rolex.html
Factors that contribute to business stability and success at Rolex include its fame and reputation, its high quality in the world of mechanical watches, tradition of innovation, Iconic design resulting in a high degree of recognition, its value remains stable with some models even appreciating with time as a Rolex is designed to last decades, Rolex never manufactures more than it can sell resulting in artificial shortages and its strong marketing and communication which brought customer loyalty to the manufacturer and not just to the dealer. Estimates put the number of watches manufactured per year at about 1 million, each watch takes a year to build, and is entirely handmade which adds to its allure.
Maserati is a luxury sports car manufacturer that was founded in the year 1914, in Bologna, Italy. It is recognized for motoring excellence, and has played an important role in the development of sports car culture. Its success is due to a unique blend of heritage and innovation that it instills in each of its cars, which are easily recognized by their signature front grille and the signature trident badge. Maserati has led the way in automotive fashion with models such as Ghibli, Gran Turismo and the Quattroporte. The styling is unique and recognizable the world over which is another feature which drives the demand for this prestigious automobile. With few competitors such as Ferrari, Lamborghini and Porsche, the company has carved out a profitable niche in the luxury sports car market.
Operating in the luxury segment, Maserati produces sedans, Sports and racing vehicles. Seen as a symbol of excellence and exclusivity, most popular offerings are the Quattroporte and the Ghibli. They have limited showrooms and also operate through selected dealers. Due to superior brand value, unique style and exclusivity creating high demand, pricing for the cars is at a premium. They have a presence in 25 countries through exclusive dealership rights. Promotion of products is well achieved through TV ads and online advertising, which emphasizes exclusivity, reliability, class and durability. It has also been associated with famous sports such as formula 1(“Maserati Marketing Mix (4Ps) Strategy | MBA Skool-Study.Learn.Share.”, 2018). Segmentation is based on psychographic and demographic basis. The target market is the ultra-rich, who look for a prestigious and exclusive automobile. Positioning is value based.
STRONG RELATIONSHIPS WITH CUSTOMERS
The global customer experience at Maserati is managed by Accenture interactive. In charge of digital advertising, brand strategy and campaign management, they deliver superior customer experience and improve interaction with current and future customers. They help to engage customers in a positive way across all channels from media to aftersales interactions. The aim is to build interactions which are authentic and consistent (Rittenhouse ; Rittenhouse, 2018). The aim is to keep customers connected over long periods so as to generate loyal and repeat customers.
Competitors like Ferrari put out on average just 7000 units per year leaving Maserati the job of catering a luxury sports car to those who can’t get their hands on a Ferrari. Increase in incomes and development of brand image in markets outside of Europe and America, such as china, together with the launch of its first SUV, the Maserati Levante and upgrade of the Quattroporte has made China the biggest market worldwide with 12,250 units sold in 2016. While most competitors would market their product as an engineering feat, the Maserati is simply an object of pure beauty which drives its demand. This together with lower prices on hugely popular models such as the Ghibli ($85000), and their excellent marketing and after sales service will ensure a stable business for the luxury sports car maker for a long while.
From the above three examples it is clear that Ferrari, Rolex and Maserati are truely niche market players who have carved out a profitable business in an otherwise very competitive industry by adopting a strategy of differentiation focus. This has led to limited competition, and through careful segmenting, targeting and positioning, they have expanded and also protected their niche, being in business for a century.
SAMSUNG was founded by Byung-Chull Lee in 1938. Samsung Electronics Industry Co Ltd started in 1969. The vision at Samsung is to be in the top 5 globally by 2020 through value creation and innovation. Samsung electronics deals mainly in Mobile devices, Television and Home Appliances.
SWOT ANALYSIS OF SAMSUNG NOTE 8
1. Samsung itself is the no.1 marketer of mobile phones with a market share of 21% worldwide. Achieved economies of scale.
2. Strong marketing capability.
3. Strong relationships with local retailers provide effective channels of distribution.
4. Samsung note 8 has latest technology such as iris login, infinity display with OLED display, s-pen, wireless fast charging etc.
5. High brand value.
1. Heavy competition from Huawei and Xaomi which are cheaper, and rapidly gaining market share (Huawei – 48% growth)
2. Consumer view of Apples IOS being better than Samsung note 8’s Android OS.
3. Apple has better marketing and the product is considered much more reliable as it does not slow down or get jammed.
4. Growth of market share of Apple phones.
1. Growing smartphone market in Sri Lanka and other developing countries
2. Smartphone based solutions for various business activities like email, video conferencing, payments, has driven the demand for the Samsung note 8
3. Can exploit online marketing and channels of distribution.
4. Collaborate with the business segment it serves to further study and develop necessary software (Dudovskiy, 2018).
1. Disruptive innovation especially by Apple, might change the market suddenly
2. Legal battles with Apple over patent infringements.
3. Overall slow growth in the premium smartphone segment.
4. Samsung note 8, is a premium offering by Samsung after one and a half years, this segment is dominated by Apple with a high brand value and consumer confidence due to reliability (Dudovskiy, 2018).