Exploring proactive niche market strategies in the steel industry: Activities and implications

The literature has often proposed a niche market strategy as the means by which producers of commodity-based products (e.g. steel, pulp and paper, and petrochemicals) can counter increasing competition, particularly from low-cost, low-price competitors. That strategy has primarily been viewed as defensive, i.e. the weaker producer builds protective barriers around its product to fend off competition. This paper proposes, on the contrary, that niche marketing can also be used as a proactive, or even aggressive, strategy to enable a firm to outperform competitors in both profitability and growth. The use of a proactive niche market strategy in practice is examined in case studies of three global Swedish steel firms that have achieved above-average profitability over time. We propose, as a result of our analysis, the concept of the proactive niche market strategy as one that employs a mix of five key activities: focusing on the customers' customers; making the effort to become a preferred supplier early in the process; interacting with customers at multiple levels; extending the product offering by adding services; and focusing on the development of “adjacent” products, markets, and applications.