Why New Small Companies need a Virgin Market Niche

In cases of great competition over available resources, the distribution of size and fitness of individuals within a particular population tend to be skewed. There tends to be a few very large, and highly fit, individuals within such population and a large number of over-dwarfed individuals. It is interesting to note that individuals who are able to set foot early and establish themselves first tend to have a chance to grow first and thus preventing the other individuals to grow well. This gives a sort of age advantage, those who come first get an 'unfair' edge.

In the business world a similar phenomenon shows in cases of high competition. The first comer tends to get an advantage over the alter comer. A business that starts in a new relatively virgin market tends to have time to build itself and establish itself there within such market. A later comer business would find it difficult to compete in such market, if the resources of such market are limited, and if such new coming business is still young and small. Therefore, for a new small business to have a chance to grow it should only try to target a relatively virgin market hence the talk about a market niche.

Finding your Market Niche Maximizes your Business Size

The rate at which new companies enter a given market tends to decrease as the number of companies already targeting such market increases till their number finally reaches a top limit (the carrying capacity of the market) above which the number of companies working within this market start to decrease. Besides the number of companies working in the given market, also the size of the companies is also affected. As more and more companies start playing in such market their size tends to become smaller and smaller. A virgin market where few or no companies are yet playing can witness the growth of large companies whereas a market already saturated will more probably accommodate companies of smaller sizes or smaller operations of those companies. It is thus a no brainer to try to market a virgin market or a specific niche in which you can grow without competition in order to reach a large size.

This is the same with living organisms. The size of living organisms tends to decrease as their density within a given area increases.