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Identify at three challenges when setting up a business. Explain why they are challenges.
Three challenges which are encountered when starting a business are: getting the correct idea, implementing the idea and doing the actual business (capital). Getting the correct idea is one the biggest challenge encountered in most cases. A correct idea is one that will be feasible. Feasibility of a business idea will depend on a number of factors which might make a given location suitable and others unsuitable. The challenge comes when an entrepreneur is not able to balance all the factors and make a correct decision on the business to start.
Another challenge comes in after a feasible idea has been chosen. The implementation of the idea will determine whether the business will pick or not. Correct implementation will depend on the kind of business however in most cases technical input is required to ensure that the business succeeds. Technical input is required in all areas especially in the marketing areas where a business especially new ones need to make an impression in order to have a share of the market.
Technical input in most cases will require capital investment. If the capital is not sufficient the entrepreneur may tend to lessen the technical input for instance by consulting less from professionals. This may harm the business depending on how significant the consultation forgone was.
Define what a “niche” product is. Give at least three examples of niche products.
A niche product in the context of a niche market can be described as a product which is difficult to product and whose customers are diverse and spread out on a large geographical area. In most cases niche products can not be produced in mass numbers due to the difficult in production. Niche products have got a unique market which is hard to serve due to their geographical dispersion.
Examples of niche products are: old historical artifacts. These products are not easily found and in any case are just. The people who may wish to buy these products are few probably scholars and are widespread in different learning institution or places. Historical institutions may also be interested in buying the historical artifacts. Another example of niche product is new scientific equipment which has been invented for use in scientific labs. Such equipment is only used by scientists and specifically in scientific laboratories. Such kinds of products have got only specific market which is widespread.
Explain why a niche company might have an advantage in a market. Would price necessarily be advantage? Explain why or why not.
A niche company serves a small section of a large market that can not be served by the mainstream providers. A niche company in this sense will have an advantage over the other mainstream providers because of lack of competition from the others. A niche company operates like a monopoly being the only provider of its products. This lack of competition in term of similar products or even substitutes gives the company an upper hand. The monopoly condition will allow the company to set its own standards which are not dictated by the market thus there is no expenditure lost in form of harmful competition. This is advantageous as the company is able to do business at its own business.
The factor of price being an advantage will depend on the product's demand. A very rare product with a very high demand can easily be sold at very high prices especially if the product is associated with some personal attachment by the client. In general for the price to be an advantage the clients must show some high level of craving for the product. A niche company being a monopoly has a chance of creating a close association with the clients making them loyal clients of the company.
Identify and explain three reasons why customers would pay more for exclusivity.
Exclusiveness in most cases is associated with status. Most people like being in a given status which differentiates them from the rest in the society, workplace or anywhere they operate. The search for status makes people to seek for products which are exclusive. This habit is quite common among young people who are keen of public attention. This is especially the case for young musicians. Exclusiveness of products in this case overrides price.
In most cases exclusive products will are authentic. It is not easy to make a copy of the products which are exclusive. As a result clients buying exclusive goods have more chances of getting an original good as compared to the other products which have flooded the market with original manufacturers. This is especially the case with electronics gadgets where exclusive gadgets tend to be more authentic than gadgets which have flooded the markets.
There are those who prefer exclusive products for official reasons. For instance there are exclusive clothes worn by clerks especially during religious festivals. This is common among the catholic community.
Explain how a niche player “chips away” at a larger competitor's base. Give three examples of retailers who have done this.
Taking the example of urban outfitters, it is possible for a niche player to chip away at a large competitor's base. For this to be achieved the niche player has to move step by step in from building the niche market and then slowly encroaching into the competitor market. The player can accomplish this by first starting with a single outlet which can be expanded later after firmly establishing itself. For a niche company to established, it must have a thorough knowledge of its clients. This will enable them to serve the interests of the clients to the satisfaction of their customers. This will create a strong bond between the niche company and its clients. Such kind of bond can also be enhanced through the creation of a social site for the clients by the company as is the case of Muttropolis retailer and its social site; online Pet Park.
After such a strong base it becomes possible to expand physically and encroach into new markets. The existing market for the niche company enables it to lure more customers and effectively encourage into larger competitor's base. Examples of retailers who have been able to expand to the extent of encroaching into larger competitor's base include Muttropolis online retailers, Beckett Media LP and urban outfitters. Another good example is that of Netflix. Netflix has quickly blown Blockbuster out of competition.