Niche Market Differentiation

Lately I’ve been pondering whether the niche market differentiation strategy of Olympus is at the root of so much ‘Olympus bashing’ on the internet. Being a long-time Nikon 1 owner, I’m certainly accustomed to a camera brand being underrated and criticized. It seems that for many people, and even some photography websites, there is a discernible anti-Olympus bias. Perhaps this is a natural result of Olympus following a niche market differentiation strategy.

NOTE: Click on images to enlarge. All photographs were captured handheld within a one hour period during a visit yesterday to Windemere Basin Park in Hamilton Ontario. Images have been added to serve as visual breaks.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/5.6, 1/4000, ISO-320, Pro Capture H mode, subject distance 14.6 metres

I suppose a good place to start is to do a quick review of basic strategic choices that a business can make. It is also important to state that one business strategy is not better than another. They’re just different. And, as market conditions shift over time, business strategies can also change.

The first strategy choice is whether a company wants to sell to a broad market or a niche one. Broad market competitors like Canon, Sony and Nikon develop a wide range of products with the basic intent of being ‘all things to all people’.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/5.6, 1/4000, ISO-320, Pro Capture H mode, subject distance 14.6 metres

The goal is to build market share across a range of various buyer segments. To a large degree profits are directly related to economies of scale. Broad market competitors then have to decide if they  want to compete on cost or on differentiation.

Broad market cost competitors do not tend to be at the leading edge of innovation with their products. They often offer their buyers a sufficient level of features and performance to meet the needs of a good cross section of the market. This also allows them to build acceptable products with perhaps fewer features or performance, at lower cost than their competitors.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-500, Pro Capture H mode, subject distance 8.6 metres

Canon is an example of a broad market cost competitor. The brand, at least from what I see in Canada, is an aggressive price promoter. Until fairly recently the sensors in Canon cameras lagged behind similar Sony and Nikon products. This is an example of ‘good enough’ product quality and performance. From a market share perspective, Canon’s strategy has been successful over the years.

Sony and Nikon are brands that are more closely aligned with a broad market differentiation strategy. Brands that follow this type of strategy tend to provide higher performance levels with their products, for example sensor performance. They will also bring some innovation and differentiation to their products. Nikon 1 is a good example of an attempt by Nikon to differentiate part of its product offering. There’s no need to dissect the reasons why the Nikon 1 product line failed. The fact that it was even introduced is an example of a differentiation strategy.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-500, Pro Capture H mode, subject distance 8.6 metres

The other basic strategic choice is to be a niche market competitor rather than broad market. Companies with this strategic orientation do not try to be ‘all things to all people’. They look at the needs of specific market segments, then focus their products and marketing on those segments.¬† The more focused and disciplined a company is with their efforts to be the best solution for specific market segments, the more successful their strategy will be. Once customer segments are identified, niche market competitors then decide if they are going to compete on cost or on differentiation.

At the present time I think the two camera manufacturers that are clearly using niche market differentiation strategies are Fujifilm and Olympus. The X-Trans sensor that Fujifilm developed is a clear example of product differentiation.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-2000, Pro Capture H mode, subject distance 9.4 metres

We can look at the decision of Olympus to stick with the M4/3 format and to bring innovative product features like 7-stop IBIS performance, IPX1 weatherproofing, Intelligent Subject Tracking, Pro Capture, Live ND, Live Composite, and Handheld Hi Res mode, as examples of a differentiation strategy.

A typical risk of a niche market differentiation strategy is that a company’s products may not be considered out-of-hand by some customers. For example, I would never consider buying a Fujifilm camera because of the incompatibility of the X-Trans sensor with some photographic software that I own and quite enjoy using.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-640, Pro Capture H mode, subject distance 8.8 metres

That doesn’t make Fuijifilm cameras and their X-Trans sensors good or bad. It simply means that the potential benefit of that point of sensor differentiation for Fujifilm is overshadowed by the software incompatibility issue for me. And, is actually a negative as I ignore Fujifilm cameras completely because of its sensor. So, I am not a niche market target customer for Fujifilm. Other folks could be.

When we look at the most common criticisms of Olympus they focus on price and sensor size. For many consumers a smaller sized sensor is equated to ‘cheaper’ in their minds. The market price of Olympus cameras does not make sense to them based on the size of the M4/3 sensor.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/5.6, 1/4000, ISO-1600, Pro Capture H mode, subject distance 11 metres

If the dominant purchase criteria of those buyers is sensor size… and if they don’t value weatherproofing, IBIS performance, the comparatively small size and weight of the Olympus system, and a host of innovative image capturing technologies… they will never be Olympus buyers. With a niche market differentiation strategy a company needs to stay focused on market segments that are best served by its unique product attributes. Other segments do not represent good market potential.

Highly regarded (and some award winning) nature photographers like Petr Bambousek, Andy Rouse, Scott Bourne and Tim Boyer didn’t start using Olympus camera gear on a whim. Like other photographers those decisions happen when the capability and unique characteristics of camera equipment meets their needs better than other products.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-1000, Pro Capture H mode, subject distance 7.2 metres

This brings us back to Olympus following a niche market differentiation strategy, and how that may contribute to general ‘Olympus bashing’ on the web, and by some websites in particular.

When segments of buyers don’t value the basic value proposition of a brand, they will criticize it. C’est la vie!

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-500, Pro Capture H mode, subject distance 9.2 metres

Olympus does have a clear market strategy, and if you want some interesting details on it you may want to take some time to read a recent in-depth interview done by Imaging Resources.

In this interview, the Olympus executive clearly states that the company has no intention to compete on price. Their strategy is focused on the unique characteristics and capabilities of their M4/3 camera equipment. They intend to pursue segments of the market that represent the best fit for their brand. Nature/birding is one such segment that is identified in the article.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-1000, Pro Capture H mode, subject distance 6.7 metres

The comparatively small size and weight of Olympus M4/3 camera equipment may appeal to you. You may be interested in IBIS performance and how it enables handheld photography at extended shutter speeds. Image capturing features like Intelligent Subject Tracking, Pro Capture, Live ND, Handheld Hi Res, in-camera focus stacking, Live Composite and Starry Sky may peak your creative interests. Being able to face any weather conditions with an IPX1 rated camera may give you a feeling of confidence. On the other hand, none of these factors mentioned may be of any interest to you whatsoever.

Ultimately you’ll decide whether the attributes of M4/3 Olympus camera gear makes sense for you or not, based on your specific camera needs. Just like you will evaluate the value proposition of other camera brands. And, that’s how it should be.

A niche market differentiation strategy is all about a company focusing its efforts on a particular segment of buyers where its products are the best fit.

Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-1000, Pro Capture H mode, subject distance 4.8 metres

Technical Note:

Photographs were captured hand-held using camera gear as noted in the EXIF data. Image were produced from RAW files using my standard process.

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Olympus OM-D E-M1X + M.Zuiko PRO 40-150 mm f/2.8 with M.Zuiko MC-20 teleconverter @ 300 mm, efov 600 mm, f/8, 1/4000, ISO-3200, Pro Capture H mode, subject distance 7 metres

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8 thoughts on “Niche Market Differentiation”

  1. Tom,

    First things first. Thanks for sharing these exquisite beauties of birds in flight. I understand that these also form part of your evidence regarding Olympus’ niche in the market.

    Now on to business — I was sort of waiting for your post on this the moment news on the shuttering of Olympus’ stores in South Korea due to the lack of profitability. Reading through the armchair pundits’ comments is like listening to the cheerleaders of an advanced funeral, to put it metaphorically. It’s hard to plumb the depths of the hatred and the vitriol against a brand that just happened to be different from what one uses. I highly doubt a lot of these armchair “experts” have even used or owned an Olympus camera.

    Market “niche-ing” as we love to call it in advertising and marketing circles is how you described the “positioning” process. Still, either there are plenty of trolls on the internet or there’s just a lot of hatred in the hearts of men to wish a brand its demise. If the present camera makers disappear to leave just a handful, there wouldn’t be much of choices. Not every camera manufacturer can cater to the different markets and it’s not going to be a good strategy to compete on all fronts anyway, especially at this time when camera sales have been declining pre-pandemic and really slid off in the Covid landscape. Not all people would like or need a FF camera and lenses, much less MF gear.

    In any case, the market is fickle anyway. Offer something and somebody is bound to say something nasty. Offer another thing and well, you’re going to hear someone bitching about it. It’s understandable to be tribal and root for your brand (if you prefer to believe in the marketers’ indoctrination) but to root for the company’s demise is really something else. Brand loyalty is also sometimes putting on blinders — it makes one oblivious to the advantages offered by the other brands.

    It also boils down to the expression “each to his own”. I won’t pretend not to be saddled by my FF Nikon before and stubbornly ignore the advantage of a smaller, lighter camera setup in my hiking recreation. However, I respect other people’s choices and wish them well.

    Oggie
    http://www.lagalog.com

    1. Thanks for your comment Oggie… I’m glad you enjoyed the images of swallows in fight!

      When I read the announcement that Olympus was leaving the South Korean market my reaction was simply to shrug. A company leaving a national market is nothing new. Nikon did the same thing by leaving the market in Brazil in 2017. I don’t know the actual sizes of the camera markets in these two countries, but from a population standpoint Brazil is four times larger than South Korea (212 million people versus 51 million). No one was predicting Nikon’s imminent demise back in 2017 because of their business decision to leave Brazil, yet Olympus haters will focus on the South Korea decision with venom.

      I suppose brand haters will always be a part of the camera market. Just like their are brand haters in many other product categories. There are a lot of auto journalists who hate the car that I most recently purchased, a Prius Prime Plug-in. I couldn’t care less what these so-called experts think. For our needs it is an exceptional vehicle that helps us be part of the solution with climate change. Thus far we have travelled about 6,100 KMs with it and we’ve used just under 104 litres of gasoline. That’s 1.7 litres/100 kilometres or 166 miles per imperial gallon. In terms of carbon emissions, we have already reduced our carbon footprint by over 2,500 pounds.

      As you know from your business background, a business strategy goes much deeper than simply product positioning from a marketing standpoint. It involves aligning all of a company’s business activities strategically: R&D/product development, manufacturing, marketing, finance, HR etc. In that regard I think that Olympus is pursuing a very disciplined strategy that absolutely leverages the brand’s strengths. I also believe that its niche market differentiation strategy is sound.

      Two important camera market dynamics exist. The average age of dedicated camera owners is increasing. Along with it, the need for smaller, lighter equipment will also grow. Later this year I’m doing a presentation to a camera club about moving to smaller sensor cameras. This is something that the club specifically asked me to talk about based on the interests of its membership.

      Nature and bird photography is one of the single largest photography segments and one that is under the least amount of competition from cell phones. System reach has always been important and will continue to be. M4/3 allows for quite good image quality with much smaller and lighter equipment. Cameras like the E-M1X when combined with the M.Zuiko PRO 150-400 mm with built-in 1.25 teleconverter will provide a unique solution in the nature/birding segment. Add in Pro Capture and you have camera gear that can do things that no other gear can match. No doubt I am in the minority, but I think Olympus is actually very well positioned to prosper in the future with its camera business. It will take some time, but market dynamics are moving in its favour.

      As Olympus has stated in the past, its imaging division is strategically important to its medical and scientific business divisions. The same cannot be said for the camera divisions of many other companies like Sony, Canon, Fuji, Panasonic and Ricoh.

      Tom

      1. Tom,

        I agree with your observations. As things stand right now, there’s a lot of things that smartphones can do that makes them viable for the casual shooter. Given the state of the economy in different parts of the world, camera purchases would really have to take a backseat. For the birders, especially, the Olympus set-up looks very much ideal and capable.

        We’ve talked about the aging market in past exchanges and it seems a viable proposition to cater to them. A .5 or 1 pound difference may not mean much in short shooting sessions but when you spend the whole afternoon or whole day hiking and moving around, it becomes more of a burden than an asset. Critics (trolls?) may say what they want but the weight and gear footprint can get in the way of getting the shots that you keep showing us here on your site.

        PS – At least Fuji is getting some love but really can’t understand the hate towards Olympus – as if the company decimated the trolls’ families that they harbor these deep-seated hatred.

        Oggie
        http://www.lagalog.com

        1. Hi Oggie,

          I think a lot of the Olympus bashing comes down to M4/3 sensor size. The trolls seem to cut Panasonic some slack in this regard as they likely view that brand as more of a specialty video type of camera.

          It’s interesting when one looks at long reach telephoto lenses like full frame 600 f/4. The M.Zuiko 300 mm f/4 weighs less than half of competitive products from Sony, Nikon and Canon and costs 75% less. I know that the full frame trolls will then harp on about image quality. My view is pretty simple. If well-known nature pro photographers like Andy Rouse, Petr Bambousek, Scott Bourne and Tim Boyer use Olympus… there is no issue with image quality with Olympus gear.

          Tom

  2. Hi Tom.
    As someone seriously considering switching to an OM-D EM-1 (as soon as I can sell enough of my Sony full-frame gear) I have an additional perspective on the merits of the Olympus approach:
    Many people now consider their mobile phones to be “good enough” cameras – and that trend will continue as these devices come out with more and more features that emulate the capabilities of “real” cameras; such as artificially blurring backgrounds to simulate aperture settings, etc.

    I reckon Olympus has been very clever in building similar, but far more advanced, features into their cameras; such as Handheld HiRes, Pro Capture, LiveND, etc … as these will not be readily copied/simulated by phone manufacturers – and, they’re probably not even possible (any time soon) to implement into full-frame technology.

    Also, it’s a slow process whereby some users (such as me!) follow the path to full-frame, based on expectations that are not fulfilled (in my case, specifically related to the implications of aperture settings with full-frame and the flow-ons to image stabilisation and ability to achieve accurate focus) – and then they look around to see what alternative path they might follow, and discover the OM-D EM-1 range.

    For me it was the realisation that I actually enjoyed using my Sony RX10ii (with 1″ sensor) more than the Sony full-frame models I had moved to – BUT, I also appreciated the image quality I could achieve with FF (when I actually managed to get all the variables properly aligned !) – So, I want the best of both worlds — and it’s looking like an OM-D EM-1 just might fit that bill.

    John TKA

    1. Hi John,

      Thanks for adding your perspectives to the discussion!

      No doubt the cameras integrated into cell phones will continue to improve and evolve. We are already seeing this with many phones now having multiple camera modules in them to give owners various focal length capabilities. For many people the image capturing capabilities of their phones is more than ‘good enough’. If they only view their images on their phones or on social media they prefer their phones over traditional cameras.

      In the future I think it is very possible that dedicated cameras will be used mainly for specific types of subject matter that are difficult to photograph with a cell phone… birds in flight, aircraft and other moving subjects, as well as handheld macro photography to name a few. The majority of people who use their phones for photography will prefer them for images of friends and family, travel, and general subject matter.

      As the camera buying segment continues to age, smaller and lighter camera gear will become more important and photographers will be facing additional trade-offs that they may not have considered in the past. For example the cost, size and weight of a lens like a 600 mm f/4 full frame prime. When comparing this type of lens from Sony, Nikon and Canon, the M.Zuiko 300 mm f/4 is 1/4 of the price and less than 1/2 of the weight. Of course there will be the ongoing debate about image quality. Ultimately many older photographers will come to the realization that if they want to continue photographing nature and other subject matter than requires a lot of reach they will need to move to a smaller, lighter system. Just like pros like Andy Rouse, Tim Boyer and others have done.

      I think it will be very interesting when the M.Zuiko 150-400 f/4.5 with integrated 1.25 X teleconverter is launched later this year. This lens will get even more professional photographers seriously considering a move to Olympus. To be able to handhold the equivalent of a 1000 mm lens at f/5.6 or 2000 mm at f/11.2 when used with the MC-20 teleconverter could be a game changer for many older photographers and pros as well.

      As far as handheld macro photography goes, I have already captured thousands of images with my E-M1X and M.Zuiko 60 mm f/2.8 macro using HHHR that I could have never captured using my Nikon D800 and Nikkor 105 mm f/2.8 macro that I used to own. That combination was simply far too heavy and the auto-focus hunted too much to be a practical handheld set-up. It was great on a tripod of course, but that type of photography doesn’t interest me in the slightest.

      Tom

  3. Interesting post today considering I was at Windermere yesterday afternoon trying to capture these little “bullets” using my Nikon D500 and the Tamron 100 – 400 lens and I think you may have had some of your better results just getting them lifting off from the nest box or anticipating them landing. Trying to catch them speeding in mid air is hopeless for me. I intend to go there this afternoon with the Olympus Mark ii and the 40 – 150 and the 2x to see how I do with that.

    1. Hi Ted,

      I haven’t been out with a camera for about 3 months so my skill set was noticeably rusty. I used Pro Capture for all of the images featured in this article. Once I have a chance to get my skill set back up where it should be, I’ll attempt to photograph these little rockets in free flight.

      Tom

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