Marketing Insight for Professionals

NICHE MARKETING: MODALITIES AND STRATEGIES AND EFFECT ON BUSINESS PERFORMANCE.
(A CASE STUDY OF ALUMINIUM BUILDING INDUSTRY)

BY

ASUNMO, OLAKUNLE OLAYIDE

This is a project submitted to the School of Post Graduate Studies, for the award of Master of Science Degree (M.Sc.) in Marketing, University of Lagos, School of Postgraduate Studies, Akoka, Lagos, Nigeria.

ABSTRACT

Niche marketing strategies has been a focus of attention to academics, professional, and entrepreneurs. The objective of this study is to examine the mode of operation, modalities of niche marketing on the business performance of aluminium firms in Nigeria. This study used primary source of data and questionnaire was used randomly to collect data from the 240 respondents as the sample size. The study employed descriptive statistics and regression analysis as methods of data analysis. The findings showed that niche market strategies do enhance business and operation performance of aluminium companies in Nigeria; niche market strategy negatively exposes aluminium firms and its range of products to intense price war and product imitations; niche marketing has no adverse effects on customer retention, satisfaction, loyalty and clientele development in aluminium industry is rejected; and niche marketing strategy has negative effect on SMEs in the aluminium industry; niche marketing strategy has no adverse effect on client development of aluminium industry in Nigeria. It was recommended that Niche marketing strategies should be adopted by all firms in the aluminium industry in Nigeria irrespective of their scale of business.

BACKGROUND OF THE STUDY
Niche marketing has been a prevalent conception among researchers and specialists over the years, and niche marketing is accepted as a significant marketing instrument in today’s marketer’s toolbox.

A wide variety of firms, as well as product and service brands have implemented the strategy of niche marketing. Such brands or sectors aren’t limited to food brands, wine and beer, retailing, tourism, airline travel, banking, accounting services, health services, chemical industries, metropolitan region, technology etc.
According to the survey reports from the United States Geological Survey’s (USGS) Mineral Commodity Summaries, an additional 1.02million tons of aluminium products have been manufactured from 6.62 million tons in year 2006. Also in recent times, China has successfully sustained the production and usage of construction products made from aluminium globally, while the production rate in the United States has tremendously been on steady decline due to high energy costs.

China has a country manufactured an additional 0.31million tons of construction products made from aluminium in year 2007, from 1.8 million tons in manufactured in year 2006, these is an estimates by the USGS. The second leading country is Russia with 1.1 million tons, a trivial growth over 2006.
Canada, the United States, and Australia took the third, fourth and fifth positions respectively in 2007 with production volume of 0.9, 0.75, and 0.66 million tons respectively.

It has been forecasted that upsurge in the demands for aluminium in the year 2007 is 7%, consumption of Aluminum products globally per annum, in upstream and downstream, will twofold over the subsequent 15 years.
Nigeria Aluminum building industry could be described in its most relative affirmative as an industry still in its development stages, vis-à-vis its equivalents in the industrialized countries.

In Nigeria context, local aluminium production started solemnly in 1959 via the launch of the First Aluminum Rolling Mill (FARM) by the government in the Eastern region of Nigeria.
Since its introduction in 1959, the aluminium sector of Nigeria has enjoyed remarkable evolution, however at the moment, only two rolling mills and five plants for the extrusion of aluminium exists in Nigeria.

The rolling mills and extrusion plants therefore, are the foremost suppliers of the aluminium construction sector. The extrusion firm in the likes of (Tower Nigeria Plc.,) Nigalex Nigeria, Priority company etc. manufacture the Aluminium designs adopted in fabricating all kinds of frames.

The aluminium building industry is highly competitive, small and medium companies could no longer survive the tense competition in the market arena, the importation of most of this material from overseas country such as china, USA and Russia has posed a superior challenge to indigenous producer and fabricator in the industries.

Most organization that engages in extrusion and fabrication has been closed down due to the competition from the high technology organization in the industry.

Fruitful competitive strategy could be achieved seamlessly when there is combination of attacking and defensive drives to build a stronger and well to do position in the chosen market place. Notable writers, in the likes of Kotler and Singh (1981), James (1984) and Ries and Trout (1986), came up with an analysis of the military warfare and competitive combats to describe the extent of competitive strategy in the market place.

In Aluminium building industry globally, competition has been the motivating source of variation and in actual sense, they deliver quality service. In making a choice between improved product value and customer satisfaction, customer satisfaction tends to take precedence.

Apparently, there is no broadly recognized definition of niche marketing. Niche marketing are an attractive opening accessible to slight business forced to contest favorable against the economies of scale that larger competitors are able to achieve.

Dalgic and Leeuw, (1994, p.40) defined niche market as a minor market segment comprising group of customers or buyers with similar desires and wants. They added that niche marketing to be “the process of aligning business, product and services positioning into minor, lucrative, identical market segments flouted or disregarded by others competitors in the market.

Niche marketing, unique competencies, capability and resources enables Nigeria Aluminium firm to advance and sustained a strategic competitive advantage position in global Aluminium industries. Foremost technological and economic changes around the world inline of product and raw material innovation are creating various opportunities for the future of many small Aluminium companies in Nigeria.

Dalgic and Leeuw 1994, there are several methodologies to niche marketing and its operationalization. Also, in respective of whether the conclusion and executive inferences are good or bad, niche marketing stays uncertain. Current changes as a result of acquaintance to various Aluminium product knowledge by users around the world, this has tremendously increase the diversity in customer taste and conducts, as well as the dynamic necessities of professionals in engineering and associated industry are probable to favor company that can improved and modify their product and services to this fragmented market.

Thus, the study pursues to discover out modalities and strategies of niche marketing in the aluminium industry, by firm concentrating its resources and capability in fighting a guerrilla battle among the tough leaders in the industry, the study shall examine the theory of niche marketing from diverse but related and coinciding viewpoints.

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