A Study on the Niche Market Strategy and Co-opetition of IT Switching Power Supply Companies

Due to high variety and low quantity, niche product markets always reveal less attraction to those volume producers. The retail market for switching power supply (SPS) products is one of the typical niche markets, where major manufacturers are reluctant to enter. However, as the retail market becomes booming due to new needs in graphic presentation, companies with scale advantages begin to enter this market segment. How do the existing niche players who used to focusing on marketing and R&D respond to such an invasion? Is there any response strategy for them?
This research begins with a brief sketch on the industry structure of SPS products and their role in the electronic systems. We then analyze the competitive dynamics among various market segments and the key motives that drive major OEM/DOM players to enter into retail markets where they previously ignored.
After the static and dynamic analyses on the retail market, we use the value net framework to suggest best reactions for retail players. As we find that these OEM/ODM players will still undertake volume based strategy, we suggest these niche players maintain their competencies in differentiating the retail market and satisfying the more specific demands in lower quantity without incurring price war.