Niche Strategy and Corporate Responsibility: Driving Small Business Success
The Competitive Edge of Small Enterprises
Introduction to Niche Marketing
There is a new generation of competitors that has entered the market and is posing a great threat to larger companies. These companies tend to operate on a specific niche, which makes them appear “closer to the customer.”
These companies concentrate on selling to a smaller market. This can help lower costs because specialization creates savings. These small firms can establish a strong image and position in their niche. Niche marketing also targets customers’ more specific needs; customers today have more of a selection to get the exact product that they desire.
These companies seem to give customers more of what they want, where larger companies and retailers do not have this specialization. Higher social classes tend to want a more specific product and are willing to pay the extra money to receive it.
Advantages of Specialization and Early Entry
Another reason this area is growing so quickly is because many smaller retailers see larger companies that are competing in their specific niches. Companies such as these are looked at as a “specialized service” and therefore it puts you in a completely different class from other competitors. If you are the first to enter this area, chances are that many other small companies will eventually try to duplicate what you have done. Usually by this time, you will have already developed customer loyalty and you will have time to improve and perfect your business.
Technology and Digital Success
Since the boom of the industry and with the quick advancement of technology, more people are turning to their computers to make everyday purchases. The Internet helps these companies build business by keyword searches. This makes it easier for customers to locate products more specific to their individual needs. This is definitely helping the success of these small companies against larger retailers.
Business Ethics and Corporate Responsibility
The Debate on Profit Maximization
The events that led up to the economic recession in 2008 and 2009 have placed a renewed emphasis on business ethics. Questionable financial reporting, inflated executive compensation, and worthless public assurances undermined investor confidence.
Some commentators believe that the primary and only responsibility of business is to make money while abiding by the law. Supporters of this point of view argue that companies’ self-interested pursuit of profit benefits the whole of society. Profitable business clearly benefits shareholders.
However, other commentators argue that business should also benefit other stakeholders. Stakeholders are people and groups with whom the business has a relationship. This includes shareholders, but extends out to include:
- Employees and their families
- The community within which the business operates
- Customers and suppliers
Competitive Advantages of Ethical Conduct
Business ethics offer companies a competitive advantage. Consumers learn to trust ethical brands and remain loyal to them, even during difficult periods. Society benefits from business ethics because ethical companies recognize their social responsibilities.
Ethics vs. Profit: The Cost of Responsibility
Business ethics reduce a company’s freedom to maximize its profit. For example, a multinational company may move its manufacturing facility to a developing country to reduce costs. Practices acceptable in that country, such as child labor, poor health and safety standards, and poverty-level wages, conflict with the standards of an ethical company.
Improvements in working conditions, such as a living wage and minimum health and safety standards, reduce the level of cost-saving that the company generates. However, it could be argued that the restrictions on company freedom benefit wider society.
Conclusions on Sustainable Business Conduct
Companies increasingly recognize the need to commit to business ethics and measure their success by more than just profitability. Companies report on their financial, social, and environmental performance. This type of performance reporting acknowledges that companies must make a profit to survive, but encourages ethical and sustainable business conduct.