How big is the niche market industry
Hidden Champion: Successful with niche products
Definition of niche product and niche market
By definition, a niche product is a special product that only a small part of the target group is interested in. The product is often specially modified for the niche market in order to reach a small group of buyers. For companies, however, niche products can still be worthwhile, as the sales price is often higher by definition or they have a positive effect on the company's external image. Examples of niche products are collectibles such as postage stamps or coins. Or regional items, such as traditional costumes or Franzbrötchen.
Definition of hidden champion
According to the definition, hidden champions are companies that are market leaders in their industry, but are nevertheless not very well known. Their turnover is sometimes more than 50 million euros or they employ over 500 people. Nevertheless, the marketing effort is low, so that the companies are often not noticed by consumers. Many of the main products of these hidden champions are innovations that give the company a technical or organizational lead. It is often niche products that the hidden champion sells in large numbers or for large sums of money.
Connection between hidden champions and niche products
Niche products have great potential in the niche market, as many rather unknown companies recognized early on. One example of this is the Herrenknecht company from Baden-Württemberg. Their niche products are machines for tunnel construction. In 1977 they developed the first tunnel boring machine; today the company employs more than 4,000 people and has a total turnover of over one billion euros per year. The company has thus developed into a hidden champion, as it used and defended the niche market. Because tunnels are bored all over the world and the orders are distributed to many different companies. But since then the company has been able to assert itself successfully with the most efficient machine on the market.
Niche products from Germany
The niche products also ensure that around two thirds of all unknown world market leaders and thus the hidden champions come from Germany or German-speaking countries. In addition to its niche market, Germany also has very distinctive medium-sized companies with a high degree of innovation. For example, almost 20 percent of these companies achieve a turnover of over 500 million euros. According to the WTO, Germany thus ranks third among the largest exporters after China and the USA.
Niche products and hidden champions - examples:
Example 1: Tetra GmbH
Ornamental fish lovers might know: Tetra GmbH, based in the district of Osnabrück, is the world market leader for aquarium accessories and fish food. The hidden champion started out as a manufacturer of hobby accessories and thus a niche product. Tetra GmbH has been part of the US Spectrum Brands group since 2005. The Group's products are sold in around 140 countries and in more than a million stores.
Example 2: M + C Schiffer
Everyone uses them, one company has specialized in them: M + C Schiffer from Neustadt has been using the niche product toothbrush since 1887. The focus may have puzzled other companies over 130 years ago. But the hidden champion prevailed. The company employs almost 1,000 people and produces up to a million toothbrushes a day.
Example 3: ADO
The hidden champion ADO creates a cozy atmosphere in the room. The company from Aschendorf in Emsland has been producing the niche product curtains for around 50 years and these are now in great demand all over the world. The so-called gold edge used by the company has established itself particularly well.
Example 4: PWM
Drivers are guaranteed to have seen PWM products, but never associated the company with them. The Hidden Champion is a high-tech specialist and world market leader for the niche product electronic price displays. These are mostly located at petrol stations. PMW is a traditional family company and has been successful in the niche market for 35 years.
Niche products and your own startup in the niche market
If you want to found a startup and develop a suitable product, you should include the niche market. Because in every industry there are niche products that can be successfully sold with the right strategies. An online shop with clothing of all brands and sizes, for example, makes little sense. That is why, for example, the niche product Fairtrade clothing or fashion for seniors would be better. In order to find the right product for the niche market, it is worth comparing the existing offers, estimating the market volume and clearly defining the target group. Then your own niche product is, in the best of cases, profitable, practical and unique.
Find a suitable niche product
Those who want to find their own niche product in the niche market should consider the following tips:
Tip 1: use Google Trends
A niche market often develops out of a trend. That is why it makes sense to be inspired by the upcoming trends. Here it becomes clear what is currently in fashion and a niche product can emerge from this. The “Google Trends” tool, for example, can help with this search, as it displays the most relevant search results.
Tip 2: brainstorm
Whether alone, with friends or relatives - brainstorming helps to collect ideas on a chosen topic. It can therefore help, for example, to search for an industry on Google Trends and then brainstorm in this area. In this way, a niche product can be found or a niche market can be discovered.
Establish niche products in the niche market in the long term
Every successful niche product also needs a suitable sales strategy. This means that it is worth using the internet and social media platforms, especially for the first phase of the start-up. Of course, it is fundamentally important to have your own homepage or blog. In the meantime, good websites can be created even with a small budget. On the other hand, if you want to rely on social media, Facebook is the right place for you. There you can easily advertise your own niche product, and customers can also contact the company directly. Instagram is also suitable for this, and depending on your budget, an influencer could even be considered. In general, it makes sense to use the existing platforms and address the target group of niche products directly.
Conclusion: niche products are worthwhile
Those who found a company look for a company as a role model and orientate themselves accordingly. These role models are then often not hidden champions with a focus on niche products. But you shouldn't focus too much on mass products, especially when looking for the ideal business idea, but also pay attention to the smaller target groups. Because the niche market has great potential and there is a wide range of simple online sales. With a well thought-out strategy, your niche product can then establish itself in the niche market in the long term.
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