A high-end sports club called Lifetime Fitness recently opened in La Jolla (CA) where I live. Think high-end resort amenities located on Main Street. With an abundance of classes, machines, healthy and tasty restaurant offerings, experienced trainers, and to-die-for steam bath and sauna, this “top brand” is stealing members from other clubs and from specialty niches gyms, like the Barre, Yoga, and Pilates studios. At $200/month, Lifetime membership is expensive. But if you work out a lot and enjoy a range of activities and an occasional steam bath, it’s a deal. The low-end clubs in La Jolla, like 24-hour Fitness, will do just fine. It’s the former high-end clubs that will find themselves challenged. Not surprisingly, some here in town are now offering membership deals, hoping to beat Lifetime’s price point. The niche spin-cycle clubs and yoga studios will also have a less-safe…
Is your market niche defensible?
I love niche businesses. Companies pursuing a niche strategy serve narrow target markets with a product or service uniquely designed for that market. Most start-ups are niche businesses, like Exact Sciences. It brought one noninvasive cancer test (for colon cancer) to the market. The company disrupted the invasive colonoscopy market and opened testing to younger patients and those reticent to have a colonoscopy. The only problem with a niche strategy is that there’s no guarantee today’s non-competitors will stay in their swim lanes. If they move into yours, you may not be able to defend your market position. Let’s look at some examples. The New York Times’ coverage of Amazon’s cloud computing business, A.W.S. (for Amazon Web Services) offers one case study. A.W.S. now packages software as part of its web-hosting offering. A.W.S. users find it easier to get their software needs…