Hidden Champions are companies that are relatively unknown to the public but that have enviable performance.
They are profitable niche players that focus on segments whose needs they can best meet. They can achieve Competitive Advantages that larger and smaller companies cannot, such as strong Differentiation, Brand Positioning, Customer Loyalty and lower unit production costs.
Characteristics of Hidden Champions
- Lower brand recognition
- High degree of customer satisfaction
- High customer retention
- High profitability
Examples of Hidden Champions
Sensata Technologies is a leading supplier of sensors and controls. Few people know about this major company, even though its products impact the automotive, appliance, aircraft, industrial, military, heavy vehicle, heating, air conditioning, data, telecommunications, recreational vehicle and marine industries. In a decade, it has become a billion dollar company with a strong niche.
Kohler is another example of a hidden champion. The company is a midsized company expanding globally. But its focus remains not on being a meandering conglomerate, but a faucet manufacturer focused on consumers first and their desires for attractive and functional faucets. Unlike competitors focused predominately on market share and price competitiveness, Kohler focuses on the consumer (her appetite for design, technology and service) and is noted for its excellence as a result. Many consumers may not even know about Kohler, but plumbers as primary purchasers do because Kohler fulfills their needs.
Why Hidden Champion Strategy works:
- Difficulty in building brand name recognition in mature markets
- Inability for companies to serve every market segment
- Focus on continuous innovation, best service and customer value, instead of marketshare and influence
- Top management stays in direct contact with customers
- Potential for customer delight and being closer to the customer than mega-competitors
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