Is it better to be a small fish in a big pond, or a big fish in a small pond?

By this I mean, is it better to compete in the mass market, with a broadly targeted product? (Small fish in a big pond...)

Or is it better to target a niche market, and dominate that niche? (Big fish in a small pond....)

All the evidence I've seen suggests, if you're just a little guy or gal, you're probably going to be more successful finding a niche market where you can be #1. That is, aim to be a big fish in a small pond....

If you go after a general market, you will have LOTS of competitors, all pouring in their advertising dollars, trying to squeeze you out.

But if you find a narrow niche, you may find that you have it all to yourself!

Why is this better? Here's why.

Competition competes away profits....

If you are competing in a general market with lots of competitors, price competition will whittle the price of your products down further and further, until it is almost impossible to make any decent profits. You want to avoid this price competition as much as you can! It just makes it harder to survive, let alone do well....

But when there's no competition? Then, you can set your price at whatever you like.

All the "little guys" who made it big that I can think of did so by starting in a niche market with little competition, and sought to dominate it....

What do you think of this? These are things I'm still mulling over....

- Dien Rice