Competitive Advantage: Carve Out Your Own Niche

Okay, here’s your marketing challenge. You own and operate a 16-room hotel in a picturesque valley near a major interstate and medium-sized airport. Just down the road is a well-known national park that attracts skiers in winter and nature lovers, golfers and anglers the rest of the year.
 
Your hotel—Pinecrest Valley Inn—is a century-old Victorian mansion on state and national historic preservation registries. Your rates are reasonable (visitors frequently call them a bargain) and your staff of four, superb. Your nearest competition is 30 miles away so your customers are a diverse assortment of truckers, freeway travelers and tourists.
 
But, nothing remains the same. A national hotel chain has announced a new 120-room hotel to be built just a half-mile from the Pinecrest Valley Inn. Rates start at just $59 per night, including free continental breakfast and indoor swimming pool. What are you going to do?
 
This real-life scenario was posed to service marketing executives during a business gathering that I attended several years ago. The individual who related the story was the owner of the Pinecrest Valley Inn. When he posed the question “What would you do?” those in the audience answered, “I’d lower prices to beat the chain hotel’s rates. And I’d compete head on by offering the same amenities.
 
When the inn’s owner said he didn’t do that, those in the group shook their heads and muttered some unintelligible remarks. What he did do, he reflected, was increase prices and made improvements. He realized that in a head to head competition with a well-known chain, he would lose. So, he created a new category—high class, destination bed and breakfast. The chain hotel could cater to the truckers and overnight freeway travelers. The Pinecrest Valley Inn would focus on a much narrower niche—honeymooners, couples celebrating anniversaries, sporting enthusiasts, seniors groups and travel clubs. And to promote the inn as a pre-planned destination retreat, he marketed special theme packages for golfers, seniors, clubs, newlyweds and others. To increase loyalty and repeat visits, he captured guests’ email addresses and sent them quarterly email newsletters featuring upcoming specials (Valentine’s Day, Autumn Getaways, Golf Tournaments).
 
Today, the Pinecrest Valley Inn is at full occupancy nearly every week of the year. The chain hotel does well too; it takes in guests who weren’t able to get into the inn because it was full.

Avoid head on competition with bigger, better-known competitors.
Carve out a niche and create a new category.