Development of a Web Based Business Oriented Towards a Market Niche in an Emerging Economy: Profightstore.Com

Development of a Web Based Business Oriented Towards a Market Niche in an Emerging Economy: Profightstore.Com

Mirjana Pejic-Bach (Faculty of Economics & Business – Zagreb, Croatia), Blazenka Knezevic (Faculty of Economics & Business – Zagreb, Croatia) and Miran Pejic-Bach (Dux Sport, Croatia)
Copyright: © 2010 |Pages: 18
DOI: 10.4018/jcit.2010040103

Abstract

In transition economies, the number of Internet users has been growing at a two or three-digit average annual growth rate in the past ten years. In addition, during that period the Internet has been considered a potentially important distribution channel for companies in different industries within transition economies. As small companies are the generator of economic growth in such economies, it is important to reconsider the possibilities of Internet usage and development of niche oriented stores within SMEs in transition economies. The basic assumption of this paper is that the Internet allows SMEs and startup companies to access niche markets which have not previously been accessible to them. The paper describes a case study of an on-line store in Croatia developed as a portal which targets the niche market.
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Setting The Stage

According to Michael Porter (Porter, 1998, p. 11), there are several generic strategies for competitive advantage gaining, those are: (1) cost leadership, (2) differentiation and (3) focus or niche strategy.

While cost leadership and differentiation target the broad market of an industry, the focus strategy is oriented towards a narrow, thoughtfully selected market segment. Porter suggests (Porter, 1998, p. 15) that focus strategy will not succeed if the targeted market segment is not different from other similar segments in one or more characteristics. Moreover, Porter (1998, p. 16) states that focus strategy can be based on (a) cost leadership or (b) differentiation in the targeted segment.

In some industries there is a room for more than one company targeting different market segments or a particular niche. Apart from that, applying a focus strategy with the aim of achieving profitability in a narrow market segment is much less expensive than targeting a wide market. Therefore, a focus (or niche) strategy is suitable for SMEs and start-up companies.

The selection of the targeting segment (or niche) is a creative process of business strategy development (Porter, 1998, p. 237). There are four aspects to be considered in the process of market segmentation (Porter, 1998, p. 238): (1) product variety; (2) buyer type, (3) geographic location of buyer, (4) distribution channel applied. Figure 1 shows the basic characteristics of each segmentation variable.

Figure 1.

Market segmentation variables and characteristics

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