Why use niche marketing

Current start-up dates

Niche marketing in practice: Sono Motors GmbH

Sono Motors is an exciting start-up from Munich. Three young founders developed the Sion - an e-car with a range of 250 kilometers and for a price of 16,000 euros, excluding the battery. The integrated solar cells generate additional energy in order to cover up to 30 kilometers a day using solar energy. The start-up vision is simple: a mobility concept for a future without petroleum and CO2 emissions.

Founders Jona and Laurin had a crucial phone call talking about the waste of petroleum. Hardly any other resource polarizes more than oil. And yet 61% of all oil is still burned for our mobility - even though we have alternatives. According to Mr. Zimmer from Sono Motors, around 60% of global CO2 emissions can be traced back to human mobility. The makers therefore decided to take matters into their own hands in order to bring about a change. So they started to build a car in Jonas Garage, which should prove that solar energy could make the Sion independent of oil.

It was co-founder Navina who convinced the other two that a crowdfunding campaign could help the project achieve a breakthrough. If the people out there really wanted a solar car, they would see it from the crowdfunding campaign.

By the end of July 2017, Sono Motors had collected over 850,000 euros through the crowdfunding campaign and had a lot of media hype. Thanks to this support, Sion was able to take the next step: developing the Sion prototype.

In order to steer the entire further process in the right direction, a special team was put together, which to this day only consists of employees who share this vision 100%. Thanks to the consistent work of the engineers, electrical technicians, management strategists, graphic designers and communication experts, the founders were able to make their dream come true.

To realize the vehicle project, the three founders were able to win Roding Automobile GmbH as a partner for the development and manufacture of the functional prototypes. Roding manufactured the vehicle frame and the passenger cell, the exterior and interior according to the design specifications of Sono Motors.

The result of all the work and effort that the Sion team has put into the CAD model is a successful car that was presented in the summer of 2017. In July, the Munich tech start-up presented the first innovative and cost-efficient electric vehicle for everyday use: the Sion. Almost 700 supporters and guests from politics, media and industry attended the presentation. Media reports from all over the world spurred the pre-sale, which took place in August together with the
Test drive tour through Europe started to convey the driving experience to potential customers and to collect further pre-orders.

In the fall, Sono Motors started a unique crowdfunding campaign to finance series production. On the internet platforms of Seedrs and WiWin, investors can purchase shares in the emerging company and grant fixed-interest loans.

Sion needs 5,000 pre-orders to go into series production. According to its own information, more than 5,000 reservations from more than 30 countries have been made. Series production is scheduled to start in 2019. The automotive supplier ElringKlinger was won over for the development and production of the battery systems. In the long term, Sono Motors does not want to stay in the niche segment with the Sion, but rather appeal to a large number of people.

On the homepage, the goal is stated to become a global mobility and energy service provider within ten years in order to be able to make a contribution to the reduction of global CO2 emissions.

An example that two essential things are right here: 

  1. The crowdfunding was implemented through the socially relevant topic
  2. The money was used carefully and efficient partnerships forged.

Niche Marketing Checklist

Critical selection of lenders:

  • If possible, financing from equity in order to reduce dependency: healthy growth from within
  • If outside capital is required: ensure a mix of investors who bring industry knowledge, experience, passion and patience with them (e.g. business angel)
  • Acquiring investors with a passion for your product (banks are very restrictive when it comes to lending due to many bankruptcies in the past)
  • Coordinate realistic growth figures, potential market opportunities and expected returns at an early stage so as not to jeopardize the company's success
  • If necessary, application for funding programs for founders (up-front costs, operating resources)
  • Crowdfunding as an initial support (realistic funding amount)

Build a relationship of trust between company founder and investors:

  • Disclose strategy or plan: where should it go?
  • Regular exchange of interests
  • Regular exchange with investors about financial planning: plan enough buffer for the unpredictable and unpredictable
  • Mutually benefit from the know-how and network

Cost management

Realize cost savings through efficient cost management:

  • Professional management of procurement and purchasing
  • Establishment of purchasing cooperatives
  • Use of synergy effects and cost savings (through annual purchase quantities) without losing quality and exclusivity
  • Outsourcing of processes (e.g. IT infrastructure) and social media activities in order to generate economic advantages and to have more time for vehicle production
  • Manufacture of individual components by suppliers
  • Cooperation with specialized design offices (development phase)
  • Purchase of certain components from large series, no in-house development (costly)> Adaptation & modification of large series parts according to individual ideas
  • Adjust the manufacture size to the number of items built
  • (Optimization of rental expenses)
  • Loyalty of employees to the brand in order to avoid fluctuation (staff with high professional competence required)

Cooperation with other manufacturers:

  • Joint development of technical standards
  • Exchange of know-how (no competition due to different niche products)
  • Development of a small series production line (mixture of manufacture and industrial production)

Cooperation with large-scale manufacturers:

  • Niche: no self-made, but modified mass-produced vehicles
  • Possible advantages: use of the platform for mass production models, partial product integration, reduction in R&D expenses, use of an existing sales network, carry over parts, etc.
  • Possible sale of company shares to corporations, external production
  • Development partnership
  • Assign various suppliers

Pricing Policy:

  • The more expensive and exclusive, the more the customer's need for luxury and differentiation can be served: differentiation based on price would be a strategy
  • In the middle of the price range there is more competition due to the increasing niche occupation of the large series manufacturers
  • Higher prices to improve margins (high unit costs)

marketing & Distribution

Increase popularity:

  • Use the potential and possibilities of digital marketing
  • Strategic marketing planning to use marketing activities (digital and classic media) in a targeted manner
  • Consider touchpoints of the target group
  • Avoid wastage (only limited budget)
  • Mixing in of classic marketing activities (company tours, track days, benefit events, specialist articles, customer events, trade fair appearances, merchandising products with brand emblems)
  • Product placement: use TV shows; Integration in movies and video clips

Digital Marketing:

  • Working with external marketing agencies (professionalism) to build a digital marketing strategy
  • Seek dialogue and exchange with customers and interested parties
  • Since this is often a manageable target group, it is possible to address them precisely, taking into account customer needs exactly: Living the individuality of your own brand
  • Use of email marketing, mobile marketing and social media marketing is recommended to increase brand awareness
  • Design of a professional and representative website
  • Set priorities (not all at the same time), depending on the preference of the target group: communicate USP and differentiating features
  • Cooperation with a well-known influencer with a large fan base in social media channels
  • Pay attention to data protection and IT security
  • Surprise customers with little things that express exclusive and individual support (brand identification of existing customers)
  • Increase in customer loyalty and customer satisfaction

Build up sales & service network:

  • It is often not possible to have your own sales network due to limited resources
  • Critical selection of the dealers, sales partners, agencies and importers commissioned. These should represent the brand philosophy and, if necessary, take over the trade
  • Focus on important regions such as Munich, Hamburg, Berlin, Cologne or Düsseldorf
  • Service and repair orders
  • Development of modern sales concepts with greater integration of digitization to enable an approachable brand and product experience

Planning & calculation

Plan for the long term:

  • Exchange with experts and consultants for total costing in order to take all parameters into account
  • Present company processes transparently
  • Learning from mistakes, regular exchange about development

Giving space to innovations:

  • Create framework conditions for realizing new ideas:
  • Ability to innovate in order to create USP (e.g. "Made in Germany")
  • Register patents with the DPMA (increase in the value of the company)
  • Room for maneuver for employees
  • Unconventional concepts and approaches, e.g. cooperation with industries: aerospace or universities

Create more profit centers:

  • If possible, develop further business areas in order to diversify (e.g. brand, products, dealer network, accessories & merchandising, own used cars)
  • Nevertheless, concentration on a few and essentials in order to be successful

External framework conditions

Strategic management in the event of external disruptions:

  • Making you independent of economic fluctuations through international orientation
  • Agree on down payments and follow-up payments
  • Focus on niche and customer-oriented production: highlight and communicate unique selling points
  • "Win-win" joint ventures with large-scale manufacturers in niche markets
  • React flexibly to the industry environment and changes in customer requirements

Cooperation between the industry manufacturers:

  • Strengthen the lobby and network in order to gain political support and draw attention to the niche market (tax privileges, if applicable)
  • "Burn" for the manufacturing concept in relation to Germany as a business location
  • Looking for contact with failed small series manufacturers: Perhaps there will be potential learning effects

Claims, artificial shortages:

  • Limited quantities and long delivery times: anticipation for enthusiasts
  • Special series or limited editions for a certain occasion, anniversary or a special customer

Charisma, emotionality and individuality as an incentive to buy:

  • Deepen business with individualizations in order to meet the customers' needs for validity and delimitation (unique items)
  • Quality through handwork with a lot of passion and time

Strong brand name and creative model names:

  • Fascinating naming (stimulates the customer's imagination)
  • Create recognition and identification (observe company philosophy)
  • Relation to your own brand and identity: Build a brand cult

Intensive and individual customer relationship:

  • Build a customer family, which is possible due to the often manageable clientele Keeping promises
  • Build and maintain personal relationships with customers and get to know the target group better and better
  • Digital possibilities can support this
  • "High Net Worth Individuals" & "Sensation Seeker" get excited about your own brand
  • Carry out customer events and events (events, viewings, etc.) in order to bind customers to the brand
  • Focus on after-sales management in order to encourage repeat purchases and ensure the company's success
  • Offer limited models exclusively to top customers
  • Acquisition of leasing and financing partners in order to offer products to a larger target group

To be in constant contact with customers in order to become better:

  • Request customer feedback in order to increase quality and service and identify potential
  • Targeting dissatisfied customers (personally or digitally)

Business and product liability insurance:

  • Protection against financial expenses due to claims for damages

Company founder

Combine different skills in the founding team:

  • Commercial and engineering know-how: learning from others
  • Before founding: business plan and survey of the "customer value"
  • Entrepreneurial vision for a profitable small series
  • The interpersonal relationship has to be right, also with investors (especially important in difficult phases)
  • Courage, perseverance, down-to-earth abilities and patience are necessary
  • Don't do everything yourself; also purchase external services or delegate them to employees in order to avoid wrong decisions
  • Focus on personality, also in marketing ("face of the brand")
  • Combine German ingenuity with American pragmatism

The author Dipl.-Kfm. Stefan Wiesmann has been a management consultant for automotive and IT companies for 20 years and has been supporting start-ups of the start2grow and SENKRECHTSTARTER initiatives for many years. As a university lecturer, he has been dealing with the topics of marketing, management and personnel management since 2004. The current specialist book (together with Markus Garbe) on successful niche marketing is available here: https://wiesmannconsult.vpweb.de/