Interested in niche marketing?
If you live on business news sites or are an audio-book addict like me (I’ve got a serious Audible addiction), you’ve probably heard people talk about how important it is for small businesses to create their own niche market. But just as vague as how to say niche (nitch? neesh?) do you have any idea of what they meant by “create your own niche market?” This article will attempt to go beyond just the definition of niche marketing to some useful examples of niche marketing. I hope this helps inspire you in your niche marketing research!
What’s a Niche Market?
You’ve heard the term “think big.” Well here we’re talking about thinking small. A niche market is a balance between being a small, targetable market and being a big enough market to be profitable. Like all marketing, niche marketing still needs to have fine-tuned product features aimed at meeting specific market needs, with price, quality of production and demographics factored in. A good example of niche marketing is a businesses narrowing its service offerings to target a small but profitable subsection of a market. An example of a large market would be pet owners. That’s pretty big. If you sell dog food, what are the odds a cat owner will buy your dog food? You’d be focusing on dog owners. But what if you’re selling shirts for toy poodles that say “my momma loves me.” We’re talking about female dog owners there, and that’s an example of a niche market. To summarize, it’s like zoning in to small group of customers that are really interested in the product you’re offering instead of targeting everyone in the market. This makes it more cost-effective to advertise for since you’re not paying to get uninterested people to view your ads.
Wait but isn’t that just a target market…
Well, yes, you could say that. It’s important to note that there’s a difference between target market and niche market. While target market refers to that small group of people you mostly want as customers, a niche market puts more emphasis on the services being offered. For instance, content developers can have blog owners as part of their target market, offering them writing services. In this case the writing services offered specifically to blog owners qualifies as a niche market.
What are some reasons for focusing on a niche market?
More often than not, per the very often proven 80/20 rule, 20% of your customers are usually your most profitable customers. Instead of having everybody as a potential customer, niche marketing allows a savvy marketer to focus on a small group of potential customers so a business can target services to meet customers' specific wants and needs. This detailed level of product market fit allows your service to be viewed as the best fit for the potential customers' needs. It’s easier to identify your target group when you have a niche. Identifying a target group isn’t too hard if you already have a niche. Who are you doing business with? What services are popular? Why? OK, there you go. You’ve got your target market and service offerings to develop a niche. Build up your customer base in that niche. This will help increase the return on your investment in marketing, advertising and most importantly - time.
If you’re a blogger, it’s almost required that you develop a niche market.
It’s easier to come off as an expert in your field when you’re writing to a niche market. Just understanding who your audience is and what you offer them makes it easier to be seen as a “thought leader.” For example instead on being an all-rounded psychotherapist, why don’t you specialize in relationship issues, build it into a brand and be known as “the love doctor.” That’s much more engaging than just being “Phil the Psychotherapist.” A little too close to Phil the Psycho… Get over not having your 15 minutes of fame. Don’t worry about being obscure to the masses. There’s a small group that completely believes in you and won’t have second thoughts taking your word for whatever niche you focus on. That’s exactly what niche marketing does for you.
Word-of-mouth marketing gone wild.
It’s easier to get quality referrals when you have a niche. This is mainly because a niche market lets you build trust and credibility as you work on getting more awareness for your products and services. The end result is you coming off as the best in your field.
Niche marketing reduces competition.
Keep your services more specific and you cut out competition almost completely. Ever heard of the Blue Ocean strategy? Check it out if, it talks exclusively about this concept. Specialization makes you unique. You don’t have price quote shootouts with your competitors. When you’re the expert in a small but profitable market, it makes it more difficult for competitors to, quite simply, compete. Your competitors will have a hard time duplicating you strategies unless they’re willing to re-brand or launch a new brand, which may be a little late as you’d have already established a footing.
Creating a niche makes marketing much easier.
Niche marketing makes it easier for you to market, position and brand your products to target the right people. Most target groups contain people with similar interest and behaviors. This increase the rate at which customers refer new customers. You don’t need the lavish advertising budgets of McDonald's as you already have your small group of engaged customers to refer other people to you. Your aim should be to develop a great product and keep each of your customers coming back for more. Make each and every customer count, instead of thinking of them as a vague blob, give them more reasons to keep coming back.
Disadvantages of Niche Marketing
Were you sitting on the edge of your seat? Maybe you’re not sitting down? Then I advise taking a seat because the following is going to be a bit rough. There are some disadvantages to niche marketing, too.
Niche markets may get invaded by large companies.
Sometimes small, profitable markets grow to the point that they wake up the sleeping giant (looking at you Starbucks). In that case, a large company can invade a niche market, throw its weight around and disrupt a small profitable niche. This is even more likely to happen if the business you’re in has room to be conducted in large scale. Here’s a good example. I wanted to start a cold brew coffee company years ago. My friend and I started roasting coffee beans and knew cold brew was taking off, but few people offered it and it wasn’t available in bottles. After having some hesitation we decided not to launch it. Several months later, there were a couple local players in the cold brew game but nothing too big. A few months after that, grocery stores started carrying cold brew bottled-to-go. A couple more months later and Starbucks started offering it in their shops. We would likely have been absolutely wailed on.
The low chances of surviving in case the business fails.
Relying on a small niche market of individuals as your sole source of revenue reduces your chances of survival in case things fail to workout. Limited product and service offerings, though very well matched with a market, don’t matter when the market fails to respond well or a bigger player is more successful.
Niche marketing examples
Let’s take a look at some niche marketing examples.Here are five examples of niche marketing.
No group understands the idea of niche marketing more than bloggers. What happens is that a particular blogger identifies a narrow topic that has a very specific audience and chooses to blog about it instead of targeting everyone. For example, a blogger that writes about running shoes instead of fashion.
There are a number of retailers who operate as niche marketers. Instead of selling a wide range of merchandise, they’d simply pick one single product to specialize in it. This works even better if the product they’re selling can’t be found elsewhere, including supermarkets and department stores.
Some modern schools
Some modern schools fall under the category of niche marketers pretty well. A case in point is the Montessori school system, which specializes in natural learning, nothing else. Though this type of school appeals to only a small fraction of the population, they’re the only alternative for parents who do NOT wish to enroll their children to the structured, conventional type of schools.
Specialty of Goods
Manufacturers with specialty goods are another great example of niche marketers. This could be household items, ornaments, student uniforms and so forth. As long as the goods manufactured fall within a certain line, then the underlying company qualifies to be in this category.
Business consultants are now taking a more specialized approach with their business ideas. Instead of targeting the entire world of business, each of the companies identifies an area that they’re best suited in, and then proceeds to give business advice in that particular segment alone.
How to identify your niche market
Your quest to identify a successful niche market can only be successful if it’s driven with passion. You need to be really passionate about what you do, and then find people who inspire you to work. These are the people who get you excited; the people who treat you with the utmost respect and give you more reason to keep going. Find that and you’ve found your target market. What’s remaining is for you to identify their wants and needs and what’s going unfulfilled. What product or service would they love to use that’s not being offered in the market?
Here are four the Questions to ask yourself if you’re trying to identify a niche market or sweet spot as some people call it.
What are your values?
What’s the driving force behind the idea? What exactly do you want to achieve and where do you want to see yourself in the next 20 years? Answer these simple questions and you’d have dug out your business’s values, which run the range from quality, creativity, sustainability and creating partnerships. You should also be able to state your core beliefs or the driving force behind the idea. Be specific with answers you give as they’ll help you pick a niche market.
What do you feel passionate about?
Is there anything in the world that you feel should be completely changed? What one obsession do you have in life? Again, be specific with your answers. If you can figure anything out, ask the people close to you to tell you that one thing that they think. This will give you an idea of what to specialize in if you want to create a niche market.
What are your strengths?
Start by listing some of the things you think make up your strengths. This could be that special talent you have, that skill or anything else that you’re convinced sets you apart from the others. Use that to create your niche.
Who’s willing to pay for what you offer?
This one’s pretty important. Who is going to give you money for you product or service? Get really detailed on this. Like stating their gender, industry, age, where they live, what are their hobbies, and so forth. You can even pull a Sigmund Freud and analyze their fears, their aspirations, needs and what they dream about. Do you have anything to fix the problems or help them reach these goals?
Three Niche Marketing Strategies to employ
Focus on meeting your customer’s unique needs.
Start by asking yourself “what’s unique and compelling about your idea?” This will help you identify the unique needs your potential market base has, as you work to make your business the solution they’ve been waiting for.
Speak the same language your customers speak.
You should be prepared to blend in, speak the same language as your target audience, or translate your brand values and benefit into something that everyone within your target group can understand.
Test the Market.
It’s important that you test your market first before throwing in any huge investment. Use online advertising like Google Adwords and Facebook ads to test landing pages and product offerings for a very fine-tuned demographic. Get feedback in the early stages from these customers and potential customers. Develop a product that offers a true benefit to customers.