profitable market niches

I’d like to tell you a story of a weird way I made the most money in my life and how it relates to marketing strategy today. Actually, I made the money for my company … oh how I wish it was for me!

One of the best jobs I ever had was global marketing director for Alcoa’s packaging division. Part of my job was to come up with new ways to use aluminum (or “aluminium”) for packaging applications. The aluminum bottle, the Coors can that turns blue when it’s cold, embossed packaging, and many other ideas came out of our efforts.

But my most successful and profitable innovation is probably the least-sexy one of all.

Finding profitable marketing niches

Many of our big beverage customers were inquiring about using colored pull tabs on top of their beverage cans. But no packaging supplier could capitalize on this niche opportunity because it was so very difficult to make. Long story short, you need long, un-interrupted runs on a single set-up to make the economics or packaging work.

Colored tabstock was messy. Our customers wanted green, pink, orange … any color for the sports team or holiday they were promoting. Neither my company nor our competitors could fit this product into their finely-tuned mass production systems.

And yet … the opportunity was too great to pass up. You see, those little tabs don’t cost too much when you consider the entire cost of the product. I realized that I could double or even triple the price of this new product and our customers would hardly notice.

Since there was no way I could make this work within my company, I had to go outside the system and look for a partner.

Marketing maneuverability and big money

Through research, I found there was just one company in the world that would “toll coat” rolls of metal in short runs. So I struck an exclusive deal with them and guaranteed a certain base volume with productivity and quality bonuses.

At first, this was not a popular solution with a lot of people in my company. The production folks did not want to give up any production at all to an outside company. I had to spend a lot of internal political capital to make it work. Basically I was saying “trust me.” It was a personal risk.

Now that I controlled the only production line in the world that could make this product, I had to sell the stuff. I created a book of samples similar to the paint chip books you might find in a hardware store and went on a world tour. I also told customers that for an extra mark-up I could make small batches of any color they wanted.

The idea was a smash hit and today, colored tabs are found on cans everywhere in the world.

But here is something that might surprise you. This little colored tab turned out to have the highest profit margin of any product my company made. Higher than aerospace products, higher than complex parts for the automotive business, higher than anything, anywhere in the world.

We were raking in money from the most boring product imaginable. What are the lessons from this little case study?

1. There is big money is in the niches

It’s hard to make money with big-scale commodity products. The money is in the nooks and crannies. How many of the projects you are working on — especially if they relate to content and social media — is simply a commodity product?

2. Marketing is about maneuverability

The key to success was finding something in this market I could leverage. In this case, finding a unique production path delighted my customers and exasperated competitors. What are you working on that is DIFFERENT from the rest of the field? How can you apply research and creativity to maneuver in a profitable marketing niche?

3. Innovation is hard work

It would have been easy for me to take the safe path and ignore this opportunity. To make it happen, I had to dig, to fight, to take risks, and challenge the status quo. A profitable marketing niche is not going to fall into your lap. You need to hustle.

4. Marketing is not all about Facebook

Too often we are obsessed with these digital dynamos that provoke all the buzz. SEO. Web traffic. Likes. But at its heart, marketing is still about creating demand through desirable products and acquiring customers. Are there opportunities for you to maneuver through price, placement, promotion, product, relationships, partnerships, innovation, etc? Take a look outside the echo chamber.

5. Put business in its place

This success happened about 15 years ago. I was proud and happy for the success. It created quite a buzz when I pulled it off. But who cares about this now? Nobody. Business moves on with or without you.

If I look at a photo album from 15 years ago, there are no pictures of colored tabs or factory production lines. The photos I love are of family events, Little League games, friends, school plays.

Business can be stressful and overwhelming but don’t forget to keep creating the photo album you are really going to love 15 years from now. Go on a hike. Take a vacation. Be silly with your kids. Facebook will still be here tomorrow.