Competing in the old niche or creating a new niche
This decision is not about ambition, but about the resources and costs you are willing to bear.
If a client already knows they need this type of product and your budget is limited, focus on competing in a familiar industry with a truly sharp differentiation. Creating a new product group is only worthwhile when the current industry is overcrowded and similar, and more importantly, you have enough resources to teach the market why they need something unprecedented. Most small and medium enterprises in Vietnam should first find a gap in their familiar industry before considering shifting how customers think in the long term.
- Guests already aware that they need this type of product.
- limited budget, with clear differences in the familiar framework
- overcrowded industry with little truly new perspectives
- short cash flow, thin team, unproven product sales
- only rename something that already exists, without a truly new perspective
This question comes up in many projects where Sinh Vũ is involved: my industry is already crowded, should I create something entirely new? The answer does not lie in ambition but in the actual resources and costs you are willing to bear.
Two directions, two types of costs
When competition exists in the industry, you have a significant advantage: customers already know they need this type of product. They are searching, comparing, and you just need to present a sufficiently sharp differentiator for them to choose you over others. The cost of educating the market is nearly zero because the market has already learned.
When creating a new product group, you must bear that cost alone. You need to explain why this issue exists, why the old way is not good enough, and why your solution is the answer. Three layers of explanation before the customer decides to buy, and each layer incurs costs, time, and patience from the team.
When to choose a direction
Competing in the existing niche is suitable when: customers already know they need this type of product, the communication budget is limited, cash flow is short, or you have a clear differentiation in a familiar demand framework that no one has effectively captured. This is a lower-risk direction and allows for quicker market validation.
Creating a new product group is worth considering when: the current industry is too crowded and competitors are nearly identical, you have a truly new perspective rather than just renaming something existing, and especially if you have enough resources and patience to nurture this process over many years. According to Kim and Mauborgne's Blue Ocean Strategy, growth in this direction comes from customers who have never been part of the industry, not from capturing market share from competitors.
The hybrid path is often more practical.
In many projects, Sinh Vũ finds that the most practical path is not to choose one of two extremes but to place the product within a framework that the customer understands, allowing them to make quick decisions, then using content and experience to gradually shift their long-term thinking.
For example: instead of introducing yourself as "the optimal service for the purchasing decision journey" (which customers may not immediately understand), start with "brand consulting" (a familiar framework), then prove through actual results that you do much more than that. Customers understand faster, cash flow remains uninterrupted, and you can still build a unique perspective over time.
April Dunford, an expert in product positioning, points out that customers always compare your product to something familiar, whether you want them to or not. If you do not proactively set that reference point, they will do it themselves, and it may not always be in your favor.
Instead of competing in an existing industry, create an uncontested market space to make competition irrelevant through value innovation: simultaneously increase value for customers and reduce costs.
Kim and Mauborgne, Blue Ocean Strategy
Common errors when choosing this direction
- Claim to create a new industry but actually just rename something existing. Customers don’t understand and don’t buy, not because they are conservative, but because you haven’t explained the real difference.
- Underestimating the cost and time to teach the market a new concept. Many businesses give up after six months, just when the market is starting to understand.
- Completely eliminating the familiar reference framework, leaving clients unsure of how to categorize you for comparison and decision-making.
- Leading the industry but lacking the power to dominate, allowing competitors with more capital to benefit when the market matures.
The viewpoint of Sinh Vũ
Sinh Vũ's S1 process designs a research step involving five to ten competitors to map the competitive landscape before advising you on which direction to choose. This step is not about copying competitors, but about clearly identifying real gaps: where competition is fierce, where no one is serving well, and where you can gain a sustainable advantage.
Sinh Vũ does not encourage creating a new industry at all costs. The cost of educating the market often exceeds the expectations of small and medium-sized enterprises. The question that needs to be answered honestly is: do you have a truly new perspective, or are you just tired of how everyone else is doing it? These two feelings can easily be confused, but their business consequences are entirely different.
Decision checklist
Topic: Competing in an existing niche or creating a new product group. Sinh Vũ guide, sinhvu.com
Select each item you find appropriate, then print or save as PDF to take with you.
If you have marked most of the signs above, this is the time to discuss in more detail. Sinh Vũ can help you review and propose a direction.
References
Kim and Mauborgne, Blue Ocean Strategy. April Dunford, the framework for competitive alternatives. The S1 perspective of Sinh Vũ Studio.
Frequently asked questions
I heard that Blue Ocean Strategy is about creating a new industry to avoid competition. Should I apply it?
The Blue Ocean Strategy by Kim and Mauborgne indeed proposes creating uncontested market space instead of competing in an existing industry. However, the book also clearly states that this growth comes from a group of customers who are not yet customers of the industry, and you must truly innovate value, meaning you need to increase value for customers while reducing costs, not just rebranding. The cost of teaching the market to understand a completely new concept is often very high and can take many years. Sinh Vũ does not recommend applying this mindset mechanically if the company's cash flow is still short.
If I want to create a new product line, what do I need to prepare?
The first question to answer is: how are customers currently solving this problem? Because no matter what you call your product, customers always compare it to something familiar, according to April Dunford's thinking about alternatives. If there is no clear answer to that question, you will waste a lot of communication budget while customers still do not understand whether to buy or not. Additionally, you need long-term resources, a strong team, and a commitment to persist for many years, not just a few months.