A brand with a niche market has in general better options for higher profitability than one that operates on commodity market.
But isn’t that a truism? Yes, but let me show that truism comes not from management, economy or any other social domain, but from physics, more specific from laws of entropy.
It is not hard to notice my passion about entropy. There is a special tag on this blog called “entropy”. Entropy connects matter with life. Life is nothing much more than a fight against entropy, as so beautifully explained by Erwin Schrödinger in What is Life.
Let me quickly apply entropy to branding:
Entropy in branding can only increase provided no human action (branding management) interferes.
As anything in this Universe each brand has a natural tendency towards higher entropy, meaning higher commodity and lower profitability. Brand management is nothing but constant striving of brand manager to enlarge brands’ entropy, meaning to make it more specific, more distinct, “more different”.
For this entropy reason brand manager has to find or develop niche markets, markets that still allow brand to keep at as high branding entropy as possible.
Which companies are best in this respect? Those that we know little about.
Really? Does not each brand strives to spread a word (publicity) around as much as possible? Yes and no. Yes: niche customers have to be aware about the brand. No: competitors should have information deficit regarding attractiveness of a particular niche. Information asymmetry is prerequisite for a company to secure niche market as long as possible.
But there is also another devastating consequence of entropy laws applied to branding. Devastating for collectivists and especially for social constructivists that propagate equality. Since each human is a vehicle of its brand, it is inherent mission of each individual to individualize, to make himself as different from another as possible. Being equal means being in highest possible entropy, means being dead.