Why You Can't Take Volvo's Terrifying Niching Risk

How Volvo Must Feel About Their Extreme Niching

I almost got teary eyed when I read the news that Volvo was going all electric by 2019, phasing completely out of gas powered cars by 2024. Why? because one of the largest car companies in the world is risking everything they built in 90 years to buckle down further into their niche of being environmental, that’s why. And the tears are because everyday, I meet small businesses which are a fraction of Volvo’s size being too terrified to niche into one area of specialty or market. Here’s why these smaller companies can’t own it like Volvo:


Is Volvo taking a risk? You betcha! Current sales of electric cars make up less than a percent of the US market. That’s really scary. The good news is that it’s growing (last year at 37%) but still on a tiny tiny base. The electric car niche is small and to convert your whole sales into a currently tiny niche is truly investing your faith in the future. Frankly most of my larger customer are terrified of focusing on one or two areas, rather than the diversified cash flow that comes from say 5 or 6 streams of business. And there’s nothing I can say, no statistic I can show to change their minds. Fear is a powerful motivator for a certain strategy (or lack of).

The Stats

Now, these guys at Volvo are no dummies. So imagine the research and strategy that went into their decision. Similarly when we do strategy work with my clients, we look at which industries have the greatest potential for us to get the biggest bang for our buck. We do this through a research process that also takes into account the company’s own culture, skill set, background and natural networks. Even when clients think their business opportunities are equally spread, the research always points to a definitive direction and focus. Then when we formulate a marketing plan specifically honing in on the focus industry, it’s magic and all the stars line up.

Opportunity Lost

Do successful businesses like Volvo go out of business if they don’t take the terrifying leap to niching and laser focusing on one area of expertise? No. Look at most other car companies who churn out everything to serve everyone. They stand for everything and nothing. Now, Volvo will be walking their talk of standing for saving the environment. What does your company stand for? What is the one single most relevant thing that you’re an expert in? So no, you won’t go broke if you refuse to focus your niche like Volvo is doing but you simply won’t grow as much as you would’ve. Look at the disrupter Tesla who has recently surpassed Ford and General Motors in stock market value, despite not even having yet launched its Model 3.
What opportunities are lost to you if you don’t own one special piece of your market or industry?
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About Chala

Chala Dincoy is a Marketing Strategist who helps B2B service providers reposition their marketing message to successfully sell to corporate clients