Businesses no longer have to choose between mass market reach and niche market richness. They can have both, argues Andrew Curry.
In the past, organisations that followed people’s passions were considered “niche”. Some weren’t organisations at all, really, but groups of fans and hobbyists doing some trading on the side. The Internet has changed this entire dynamic. Instead of having to choose between “mass” and “niche”, passion now has mass market potential.
That’s what Philip Evans and Thomas Wurster argue, anyway.
Passion is about experience, knowledge, and connoiseurship, and there are strong consumer trends which suggest these are all on the rise. One thinks of the professionalisation of the consumer world. It is no longer enough to be an expert cook; one needs to have the same knives a professional chef expects to find in the restaurant kitchen. Or consider the average cyclist, now following a professional training programme, recording training sessions via a heart monitor and uploading the data for analysis when he gets home.
In many previously high-investment areas (think of music editing, video production), the cost of the technology needed for a professional-looking job has plummeted. The knowledge and tailoring that true expertise required used to limit reach. No more.
The knowledgeable fan or enthusiast is the curator of a far larger museum today, with a far larger and more engaged audience. Similarly, the Internet enables businesses to reach passionate consumers far more easily: such brands are “pulled” into the conversation by consumers in communities of interest, rather than having to “push” themselves using conventional marketing.
So how do we understand this in terms of proposition?
One tool is a simple model that explores levels of engagement by provider and by customer. Originally created by The Futures Company for a report published by Coca-Cola, the model indicates low engagement on the part of both supplier and customer in the bottom left. This is a passion-free zone, occupied by retailers such as Poundland in the UK and other budget stores focused on piling high and selling cheap.
The bottom right sees low engagement by the customer, but not by the provider. This is a zone of necessary but low- interest goods, provided by relatively high-engagement providers. One thinks of a supermarket such as Carrefour, for example, whose proposition is underpinned by hugely complex logistics upon which the shopper must rely.
The passion in this quadrant usually lives behind the scenes, though it sometimes surfaces in positioning statements (e.g., “passionate about the freshest cauliflower”) that seem like a good idea but largely pass consumers by.
The top two zones are more interesting. The top right is the expected area for the passion-filled “rich” proposition, in which high-engagement providers and high-engagement customers meet in a passionate embrace. The Body Shop, L’Occitane and Innocent fruit smoothies live in this category. Operating successfully in this space is expensive, but offers premium returns.
In the top left hand zone we see a passion sleight of hand. Customers are engaged, but suppliers are not. This is the space in which online providers leverage enthusiastic communities to break the dilemma of reach and richness, offering depth and scale. An example in this category is Amazon, which first selected books not out of passion, but because they were the simplest products to source, store and ship. What Amazon has done brilliantly, however, is to build a space that has been colonised by enthusiasts, and it has encouraged this colonisation in the same way a gardener might design an area knowing that it will attract bees or butterflies.
Likewise, eBay created a market where none existed before: the online equivalent of the yard sale and the flea market.
In categories that have not been so easily leveraged, there is an opportunity for retailers beached by the Internet. Fans love access. And while every music shop can’t have the enthusiasm of London’s iconic Rough Trade, the high street or main street retailer can break out of the mindset of logistics and stock management by moving online. Curators can thrive here, linking the knowledge and commitment that exist in both the physical and digital worlds.
Source: Philip Evans and Thomas Wurster (1999), Blown to Bits. Harvard Business School Press.