Sustaining a niche business

Lavecky wanted to rid dim sum of additives such as MSG, a common flavour enhancer, and cornflour, which added weight to the product. Standard flavours were seafood or pork dumplings but Lavecky knew many people were allergic to seafood and people of some religions would not eat pork. From there she was also quick to service vegetarians, vegans, and consumers affected by coeliac disease (gluten intolerance). In this way, she extended her market by recognising different needs, developing suitable product to cater for those consumers.

By developing fillings using A-grade produce and with HACCP (Hazard Analysis Critical Control Program) accreditation, a strict certification that is the minimum standard in some market segments, such as hotels and airlines, Lavecky’s product stood above similar product found in Chinese grocery stores. This justified a higher price point and enabled her to sell to the premium end of the market, including David Jones, fine food stores and catering firms, which Kapeleris says is common. “Niche products can often sell at a higher margin because they add value to the marketplace.”

Fostering consumer trust in the Lotus & Ming brand also formed a sizeable part of Lavecky's business plan. She notes that it's important that consumers feel confident in the product they’re eating and have faith in the brand they’re purchasing, especially in light of doubts over competitors' imports, compounded by cases such as cardboard filling found in Chinese-made buns.

Kapeleris calls this type of branding a business' 'sustainable competitive advantage', the point of difference that sets a business apart from competitors. "It could be having a strong brand with your product or maintaining product consistency. If you’re able to do that, it differentiates you from others," he says.

Things that you do, or don't do, can be leveraged in your marketing identity, making your brand memorable. In Lavecky's case, her product has a few points of difference, for example a vegan may remember her product as the only dim sum he can eat, or a catering company may require a HACCP-accredited supplier.

You can exploit a more official competitive advantage through the use of patents for certain types of product. Leanne Preston, founder of Wild Child, the 2007 Telstra Australian Business Woman of the Year, started her company when she discovered that the head lice treatment she bought for her daughter was toxic and full of harmful chemicals. She developed Quit Nits, a natural remedy that has been clinically tested, classified as a medicine, and patented around the world.

Protecting intellectual property (IP) benefits a niche business in a few ways. Before applying for a patent or trademark, you can research other protected products and gauge the market with regard to potential competition. As Kapeleris says, the freedom to operate is very important in the early stages of doing a market assessment because you need to determine whether someone else has a similar idea, product or service out there.

But the best use of a patent is the free rein it gives for a limited time. "A patent protects the novelty and utility of the new opportunity for 20 years," he explains. "If you are able to use patents or trademarks or some sort of design registration, it gives the owner of the IP a chance to exploit that exclusively."

Diversify & Protect

Wild Child is a good example of a business that has explored several avenues to maintain and expand its niche over 10 years. The most obvious way to expand is to diversify. In addition to the original Quit Nits solution, which eliminates lice, Wild Child also produce preventative treatments and a range of natural sunscreens, leveraging off the natural aspect of Quit Nits. "We'll have other products as well. Now that we have a patent behind our product we can commercialise technology for agriculture, veterinary and health," says Preston.