Updated: Apr 6, 2018
Starting a business? Most small businesses succeed by finding and focusing on a niche market.
Even in most developed markets, large companies cannot afford to be all things to all people. And small businesses can use this opportunity to satisfy the unmet needs of specific niche markets.
Finding a profitable niche market can sometimes be challenging. In this article, we will share how small businesses can find a profitable niche market.
Do you already have an idea of what you want to offer? Stop! Remove all pre-conceived notions and start a fresh.
Before you can identify your niche market, you will have to first evaluate all possibilities. And if you think you can target everyone, think again. By targeting everyone, not only will you exhaust yourself, but you will confuse customers.
List all core products and services that you want to offer. And list your passion, strengths and experiences as these factors can help shape your business. For example, 10 years of real estate experience can help you start a realtor app.
Define various consumer segments that might have a need for your product. You should consider geographic, demographic and psychographic factors in your segmentation.
List all potential use cases for your products. Speak to potential consumers and find out how they will (or will not) use your products or services. For example, WD-40 was first invented as rust-prevention solvent and degreaser for the aerospace industry. But consumers found novel uses such as cleaning tiles, softening leather and erasing crayons.
Understanding how consumers use your products can help you better craft marketing messages for your niche market.
2. Focus, Focus and Focus.
Now that you have listed all possible products, audiences and uses, it’s time to decide on what you want to focus on. You cannot be all things to all people.
Conduct comprehensive market research and identify market niches with the highest potential. Evaluate factors such as market size, growth opportunities and competition level.
You want to target a market niche generates the most returns for your limited resources.
3. Create Customer Profiles
Successful business owners look at the world from the perspective of their customers. They identify customers’ needs, wants, interests, concerns and the best way to speak to prospective customers.
Creating customer profiles can help you better understand different customer segments. Let's see how a cafe used customer profiles to understand its customers.
4. Understand Your Target Audience
There are many free websites, online tools and social media platforms that can help small businesses conduct consumer research.
Social media contains a wealth of information. People with specific interests or needs tend to gravitate toward others in a similar situation. Use hashtags and trending topics to search for potential niches on social media and online forums.
Are there social media groups helping people find extra large men's shoes? Are women asking on forums where they can buy maternity clothes for executives?
Review sites like Yelp, Google+, TripAdvisor and niche blogs can help you understand customer preferences and frustrations. People turn to these websites to get trusted information and give their feedback. You might be able to find an under-served niche.
Case Study: Pet Food For Dogs
Using Google free tools, we can identify several niche markets for dog food (e.g. diabetic, puppies, older dogs, natural, organic dog foods). From this research, we see a trend, consumers are willing to buy healthy pet food for their dogs.
6. Marketing Testing
Once you have identified your niche and developed a product, test the market. Give people the opportunity to buy and use your products and services. Giving out free samples or trial memberships lets customers try your offerings in a risk-free situation.
Information from such field tests will give you valuable insights into consumer behavior and the opportunity to improve your offerings before you actively marketing your products.
7. Market, Market and Market
Marketing is especially important for a niche business. By definition, a niche business is relatively unknown. A new product, new segment and new way of doing things.
In Niche Marketing, you need to educate potential consumers by teaching them how to use your products and services. Give customers common use cases and let them develop new use cases.
Use the right channels. Promote your products on channels that your niche market uses. For example, if you are an online florist, using image rich social media platforms like Instagram and Pinterest will be more effective than LinkedIn.
Speak to customers with the right message. Focus on copywriting, voice and tone. How you write is as important as what you write. For example, "Is Organic Pet Food Necessary?" vs "Organic Pet Food Is Necessary!" have different meanings and tone.
8. Get Started!
It’s time to launch your products and services! For many entrepreneurs, this is the most difficult stage of starting a business. Remember that your products don't have to be perfect.
Starting a business is a learning journey, you need to constantly improve your offerings. With proper market research, entering a niche market will be a calculated risk and not a gamble. Get started today!
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