Identifying a niche market is a more profitable strategy for small businesses, rather than trying to sell products and services to all “potential” customers. As we have noted before, “the most successful enterprises work hard to target specific groups of customers to whom their offerings are most attractive.” Those specific groups comprise a niche market where focused branding and marketing messages often have the greatest impact – because those groups are made up of prospective customers most likely to be drawn to what a business has to offer.
Finding a niche also serves as an excellent way to stand out from the crowd. Broadly speaking, a niche business “is a specialized or focused area of a broader market that businesses can serve to differentiate themselves from the competition,” according to Business News Daily.
Anything that differentiates your business from a crowd of competitors has the potential to trigger fast and large-scale growth – the goal of many small business. Key benefits include:
- A bank of loyal customers who belong to this niche market and gratefully purchase the products or services delivered by an enterprising small business
- Reduced competition because this niche market has been largely overlooked
That’s why: It makes sense to pursue a specialized group of customers, rather than attempting to sell to everyone.
Identify your target audience
How does a business go about identifying the right niche market?
Start the process by “closely analyzing the current state of the market and determining if a significant enough portion of that customer base is receiving the special attention it wants and demands.” If that customer segment isn’t receiving special attention, it’s a golden opportunity for your business to gain a valuable foothold.
Other strategies include:
- Checking out Google Trends to determine the level of potential interest in a product or service aimed at an underserved audience.
- Seeing what’s going on on social media. Are consumers looking for a product or service close to what you offer?
- Researching the range of products offered by the big online sellers, such as Amazon.
Is your proposed niche product or service already offered by other small businesses? That might not be a bad thing, notes Constant Contact, since “finding a large amount of products that already exist for your niche … indicates a strong market,” particularly if you focus your efforts on creating a product “that’s unique and stands out.”
Conducting research takes time and resources. But if you land upon an underserved niche market, it’s well worth the effort.
Assess the level of your own commitment
Taking on the challenge of locating and profiting from a niche market requires a certain mindset. It starts with having the necessary passion and energy to go after this market. Without that energy, you can easily lose interest in doing the hard work involved.
Consult friends and colleagues in your professional networks. Use these individuals as sounding boards to evaluate the potential of your niche product or service. Does it strike others as a great idea and worth pursuing, or do you encounter mostly lukewarm levels of interest?
Don’t think you have to reinvent the wheel. To appeal to a niche audience, you may only need to tweak an existing product or service. Maybe a minor upgrade will do the trick, as opposed to creating an entirely new offering.
Focusing your energy on this specialized market can be hugely profitable, as long as you have the right level of commitment.
Gauge the degree of interest in your product
Appealing to a niche market doesn’t have to depend upon guesswork. Once you have a viable product to share with prospective customers, it’s time to test it out.
One effective means of assessing interest among consumers is: offering them the chance to “test-drive” your niche product. Offer samples with sufficient features that provide a reasonable way for people to try out the product. This can be in your bricks-and-mortar store, through free online deliveries, at trade shows and other industry-related venues.
The feedback you get can give you a fairly clear idea about how well the offering is regarded by potential buyers.
Another option is distributing surveys among those who try out your new product. Create brief surveys focusing on whether or not this product genuinely addresses an overlooked consumer need, if it’s easy to use, what other benefits might be gained, etc. Surveys can occur via email, through on-the-spot questionnaires at tradeshows, or in small focus groups.
Again, this will help you determine whether or not to move forward to larger-scale production and distribution.
Identifying and reaching out to a niche customer market requires time, resources and focus. The potential for growth, is huge.