Day 6 —Finding Your Niche - Lessons from the Founder of 5 Hour Energy

Today I will share with you…

The secret technique Manoj Bhargava (Founder of 5 Hour Energy) used to position and grow ‘5 Hour Energy’ into the leading energy shot with 90% market share, whilst creating a new multibillion dollar market.

How 5 Hour Energy Created its Own Multi Billion $ Industry…

Below is an excerpt from Forbes…

Bhargava, 58, is so under the radar that he barely registers on Web searches. His paper trail is thin, consisting primarily of more than 90 lawsuits. This is his first press interview. “I’m killing it right now,” he says, adjusting a black zip-up cardigan from behind the table of a soulless conference room in a beige low-rise building in a suburban business park in Farmington Hills, Mich. “But you’ll Google me and find, like, some lawyer in Singapore.”

Vague and inscrutable is how ­Bhargava likes things. The names of 5-Hour’s parent company, Living Essentials LLC, and that company’s parent firm, Innovation Ventures, are purposely bland. “They were intended as placeholders, and they stuck,” he says, smiling.

Colleagues and acquaintances uniformly describe Bhargava as “humble,” and he seems proud of his frugal lifestyle: his ancient flip phone, his cheap office furniture, the modest two-story home he shares with his wife and 20-year-old son. Yet, over vegetarian lasagna at Antonio’s, his favorite strip-mall Italian joint off Detroit’s Twelve-Mile Road, Bhargava says, apropos of nothing: “I’m probably the wealthiest Indian in America.”The rise of 5-Hour began in the spring of 2003, when Bhargava found himself at a natural products trade show in Anaheim, Calif. At one booth the sales reps peddled a 16-ounce concoction claiming to boost productivity for hours. Bhargava took a swig. “For the next six or seven hours I was in great shape,” he says. “I thought, Wow, this is amazing. I can sell this.”

Right away, though, he knew 16 ounces wouldn’t sell. He didn’t want to compete with Red Bull, at the time new to the market. Nor did he want to share fridge space with Coke or Pepsi. “I thought, If I’m tired, am I also thirsty? Is that like having a headache and a stomachache? It didn’t make any sense.” He glanced at the ingredients label and made a mental note. Six months later his version was on the shelves, two ounces of ­caffeine-infused B vitamins such as niacin mixed with acids like taurine.

Bhargava’s team still had to convince stores and buyers alike that their product was safe. The initial job of getting 5-Hour Energy on the shelves went to Rise Meguiar, Living Essentials’ vice president of sales and the only woman on a team of 17. Health chain GNC was the first to bite, agreeing to stock 5-Hour in 1,200 of its stores in 2004. Slowly but surely, Walgreens, Rite Aid and regional chains like Sheetz followed.”

Key Takeaway

Bhagava thought about who his competition would be in every sub-niche of the existing market he wanted to enter. When he realized there was indeed heavy competition in existing niches, he looked for a way to create a new niche he would then dominate. His thinking process was as follows:

In the energy drinks market, Bhagava didn’t want to create a large energy drink, as that would compete with red bull. He didn’t want to create a standard can drink, as that would compete with coca cola. So he decided to create his own niche; “Energy Shots,” where there was no competition.

Copy this way of thinking about your business.

Ask…If I enter this existing market, who will be my competition?

What existing dimension of current products on the market can I change to create a new niche that I can dominate? Possible existing product dimensions to change could be: time, design, function.

Use The 4 Action Question Framework from “Blue Ocean Strategy” as a guide to help you figuring out which dimensions to adjust in your industry: