By Rebecca Puttock
It is common to hear about high competition being a bane for small businesses. Many new entrepreneurs enter saturated markets, hoping to make it.
Now comes the really hard part. As a startup, you must work extra hard to get people to notice you. And, therein lies the challenge. How many small businesses have the budget for sustained marketing and advertising?
Unless you have a benefactor footing all the bills, which we can say not many, the business will struggle along as it tries to blend in with more established ones. If you are lucky, you will not be part of the 21.5% of businesses that do not survive the first year.
On a brighter note, there is a solution to avoiding competition. We are talking about going into an area so niche that only few would dare to venture into. And, it comes in the form of a high-end small business.
We will tell you why it makes sound business sense and provide tips on how to go about it.
1. Think Like The Rich
Tip number 1: get into the mindset of a luxury brand customer
Luxury brand customers like nice, expensive things. Many of them have no problem spending money to acquire them. But, it helps to know who to target.
If you Google the word, Nouveau Riche. The definition is people with new money who live ostentatious lives. We shall leave out the part about lacking good taste because that is debatable.
Those with generational wealth may indeed use the term in a derogatory manner. But, this demographic does spend on high-end brands.
Take the example of hip-hop stars and rappers. Jay Z, Megan the Stallion, and Kanye West have chains worth hundreds of thousands. Just Google ‘the most expensive chains owned by rappers’, and the figures will shock you.
You see, many people with old money do not like to show it off. Take the example of Warren Buffet, one of the biggest investors of all time. Estimates put his net worth at over $110 billion. Yet, here is where it gets interesting.
This billionaire lives in a home he bought way back in 1958. At that time, it was worth $31,500. Can he afford a better house? Of course, he can. But he doesn’t see the need to.
This gentleman will not even splurge on a restaurant meal if he can get the same at home. By anyone’s standards, he lives a very frugal life.
Now, the nouveau riche have no problem spending their money. The more expensive, the better. Dropping prices or bragging about exclusivity makes for great conversation. And that is what you must deliver with your offering.
2. Explore your Niche Further
Tip number 2: provide differentiation within the niche
Say you want to get into the jewelry business. You could stock the normal high-priced products that every other business has. The trick is to have unique items within the store.
Let’s use the example of ladies’ bracelets. Any woman can walk in and buy one. But, create differentiation by thinking outside of that tired old box. Bracelets don’t only need to be worn during the day or at an evening outing.
How about a tennis bracelet for a day. That perfect outfit would come together so beautifully with a gem-studded bracelet. Therefore, you will be making this stylish lady stand out. You can be sure her friends will be calling you for an even bigger, better bracelet.
Or, how about giving the ladies what they really love. Chocolate diamonds, for instance, are a very niche product.
The use of heat and pressure during production gives the rare diamond the rich brown hue of chocolate.
Here’s an idea. Package the product with the finest chocolate selection available and position it as the perfect gift to their partners.
3. It Is All About Exclusivity
Tip number 3: Tap into the emotion of the high-end customer.
The driving force of high-end customers is not to satisfy a NEED. The emotion for them is to sate the WANT.
A $50 sneaker provides functionality and looks good. But the high-end customer will buy a $4500 pair of Air Jordans, just for the feel-good factor.
The more exclusive the brand, the more customers will want it. It is up to you to create that perception in the customer’s mind. It could be about:-
- Very high pricing to limit the number of customers who can buy it
- Allowing availability within a specific region only
- Creating barriers to get access to the items
- Limiting the supply of the product to the market
It is a fantastic strategy that has worked for brands like Nike. They create that sense of urgency and scarcity with the limited edition sneakers strategy. It is all about arousing FOMO (fear of missing out). They do it so well that they have a release or calendar and app.
Remember, the high-end customer likes to think that they are one of a select few who own the product.
4. Throw Out Marketing Rule Books
Tip number 4. Learn how to sell to high-end customers
You may think offering discounts is a good marketing strategy. Well, it is; we can’t argue with that fact. But, it works well for mass-market audiences.
You see, an affluent person does not see a discount as a good thing. It goes back to the point that the more expensive and exclusive, the better.
Offering a discount could come across as indicative of inferior quality items. It also takes away the element of exclusivity. If everyone can afford it, what is the point of having it?
High-end brands do not discuss pricing with customers. You can’t be serious about buying a Rolex if you want to haggle on pricing.
Have you ever seen brands like Louis Vuitton having sales? Here is what you may not know. The company will destroy any bags they have not been able to sell. Sounds pretty harsh, considering they can lower the price and make it available to everyone, right?
Well, the brand has spent years creating a perception of exclusivity. Sales or discounts will dilute the brand, which would not make good business sense.
Starting a high-end business saves you from one thing. You don’t have to swim in the same pond as everyone else. It provides differentiation that significantly improves chances of success.
High-end customers have no problem paying, as long as you can ensure some things. The products should be unique and of high quality.
Ensuring exclusivity is also important. Therefore, your offering should only be available to a select few who can afford it.
About the Author
Rebecca Puttock – I’m an experienced lifestyle blogger. Passionate about the internet, media, entertainment and celebrities. I love to create buzz among the media. Big fan of voguemagazine.