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