A niche market can be defined as a subgroup of a larger market that has its own unique identity, needs, and, preferences making it stand out from the overall market. Niche marketing entails channeling marketing efforts towards first identifying a particular type of clientele and their particular needs. And then attempt to deliver a better solution not being offered by other companies.
How do You Define a Niche Market?
Defining a distinct niche is key to building a successful small business. The reason why you need a niche is to help you focus on specific customers where you can really listen to what they want and need. This will help you to position your business as not only an expert but a business that is offering unique solutions to your customer’s specific needs.
Starting a niche business can increase your buisness’ prospects for success. A niche market can help you garner attention, establish a loyal base of customers, and even opens up opportunities to expand into larger markets. With a niche market, you can start small and grow gradually making it an ideal choice for small start-ups to enter markets and compete with bigger competition.
How a Niche Market Works
By identifying a niche market, you get to tap into a segment of a broader market with its own needs and preferences through the sale of personalized products and services. There are several benefits to choosing a niche market, for one it helps to reduce the number of competitors your business has. Second, your business model focuses its efforts on a particular type of client giving you clearer direction for developing unique content or choosing a limited number of products to sell. With such targeting not only do you get a better understanding of the needs of your customers but you can also create brand loyalty easily.
Why You Should Consider a Niche Market for Your Business
Simply put a niche market puts the quality of clients before a large customer base. By segmenting your clientele and pinpointing the type of clientele that is best suited to leverage your brand and products you can embark on a focused effort towards capitalizing on your efficiency. You can select your niche market through geography (neighborhood, city, or even country); demographics (age, gender, education, or income level); psychographics (attitudes, values, interests); level of quality of the product (economic, handmade, premium); and price (discounted, moderate, luxury). This strategy will afford you the following competitive advantages:
Brand loyalty: With a niche market, you engage with a smaller targeted audience. This allows you to focus on the quality of customer service and build lasting relationships with them.
Cut costs on promotions and marketing: Since you know your targeted customer very well you can easily identify the best touchpoints with customers in terms of niche marketing and advertising. Because you run targeted ads specific to the needs of your target audience you cut your costs substantially when marketing your products and services.
Less competition: Because you cater to a select type of customers you offer something unique compared to those companies that seek the mass market. This gives you an edge over them in terms of offering something unique.
Potential high profits: Since you cater to the specific needs of your targeted customers you offer a particular type of product or service not available anywhere else. As such your clients will be inclined to pay a little extra more for your unique service.
Show expertise: When you offer a specialized product to serve a niche market, you are in effect becoming an expert in your field. This makes you stand out as the best option to get the right answers for customers. These skills and expertise in one area can go a long way in attracting customers with specific needs.
What are the Criticisms of Niche Markets?
Despite the advantages of niche markets, there are also potential niche mistakes. Among these include:
Limited Growth: Because niche markets focus on a subset of the entire market the number of clients you attract will be limited. As such you will focus on small production volumes and a few customers thus limiting your business’ potential for growth.
Negatively impact profits: Having few customers will in return also negatively affect opportunities to make a profit. Unless you offer premium prices for your products and services serving a smaller target market, it can sometimes make it harder to earn good profits.
Potential for competition to crop up: Business entry requirements in a niche market are often relatively low and do not rely on significant investments. As such you might face a sudden inundation of competition serving in your niche and eat into your market share.
10 Amazing Niche Market Examples
Because of the relative ease and smaller capital required to start a niche market, there are endless possibilities for entrepreneurs to enter the marketplace with their product or service and compete. That’s what makes niche markets appealing. However not all niche markets end up succeeding like any enterprise these require thorough research on what your niche market will be. How to go about your niche marketing activities and how you deploy your niche marketing strategies to deliver your message directly to your ideal clients in a way that will appeal to them is key. Below are some examples of niche markets taking the market by storm.
1. Vegan Baking
The global vegan food market reached a value of about $15.4 billion in 2020. Spurred by lifestyles, food restrictions, or allergies there is an increasing demand for vegan food. One company that is tapping into this unmet demand is Divvies. Through its nifty marketing strategy, it has built a strong customer base that craves vegan nut-free cookies, popcorn, cupcakes, cookie, and sandwiches.
2. Home Security Products
Home security is a potential niche market you can explore. Whether you are away abroad or at the office you need to make sure that your home is secure. One such company that tapped into the market is Ring which is a smart home security device producer that pioneered the video doorbell. The technology allows users to see, talk to, and record people who come to their doorsteps.
3. Casual Wear
Let’s face there is nothing as disappointing as going to a shop, finding a shirt that we like, and that the shop does not have one in our size. With Untuckit customers will not experience this as the company has more than 50 fits targeted at men and women.
4. Self-improvement
Self-improvement is a fast-growing niche market with more and more people looking to improve on their skills set as well as advance their careers. By offering courses, webinars, coaching sessions as well as self-help books and videos you too can tap into this lucrative business. Companies like Skillshare have carved a niche Skillshare through their online learning platform offering thousands of classes on topics including illustration, design, photography, video, freelancing, and more.
5. Gaming
In recent years the gaming industry has seen rapid growth over literally all platforms be they through consoles, PCs, and others. Gaming enthusiasts these days are looking for custom-made hardware to suit their growing demands. Glorious PC Gaming Race is responding by offering gaming laptops, PC mice, mousepads, hangers for headphones and goggles, and more.
6. Social Conscious
Did you know that some 10% of the population is left-handed? Despite this, left-handed people often struggle to perform basic daily tasks in a world designed for right-handed people. Things like measuring cups, tapes, rulers, household equipment, and devices are all designed with right-handed individuals in mind. Seeing this Lefty’s has a whole store dedicated to products for left-handed people that included left-handed kitchen items, school and office supplies, gifts, and more.
7. Sportswear
You might know the Under Armour brand but did you know that the company was started to meet specific needs in the market? In 1996 Kevin Plank the company’s founder and former football player wanted a shirt that wouldn’t be soaked with sweat after a few minutes playing football. As such he developed a compression shirt made of material that stayed dry during intense physical exertions. Soon the brand became a global sports equipment company that manufactures footwear, sports, and casual apparel.
8. Freelance work
As homeowners, we often rely on others to run errands for us or help out with tasks. But how do you find the right person for the job? Gig apps like TaskRabbit can help connect you with people in your area willing to do these chores for a fee. This gig app can help you get help in several jobs including plumbing, haircutting, teaching music, and others.
9. Fintech
Fintech has been an indispensable tool for business. Besides offering cost-effective options for consumers and businesses it helps to save money and integrates both physical and digital payment methods as one. The company Square offers unique solutions to small businesses whereby they can accept credit cards using their phones. Additionally, it offers solutions that include invoicing, virtual terminals, online payments, and tools to monitor and dispute chargebacks to help small businesses grow.
10. Health and Fitness
For years we have been obsessing over losing weight and getting in shape. In today’s market, there are many seeking help for weight loss, building muscles, having a healthy diet, supplements, fitness equipment, and more. Health and fitness niches such as the Atkins Diet, Keto diet, Weight Watchers, and others continue to offer solutions to targeted customers.
How to Find a Niche Market
To find your dream niche you will need to carefully deliberate on your options. The following steps can help you arrive at finding your true niche.
Research Potential Niches and Find Your Market Segment
You will need to take time to thoroughly research various niches before you settle on one.
Start with your passion and interest: To help you close in on your niche start with your passion and interests. This could be a hobby or skillset that you are particularly passionate about or good at.
See if there is a solution to a problem in the market: Remember a niche is all about a unique solution for unmet demand from your niche audiences. Research possible solutions by creating a visual map of all your ideas to develop your offering to the market where others are not delivering. See if your market segment is big enough to sustain your business and research marketing examples.
Keep an eye on the competition: Before launching your company and building your brand research your potential competitors. Measure how your product or solution weighs compared to what they are offering in terms of quality and price. Use Google trends and keyword research to do your competitive research.
Write your business plan: Your business plan is your blueprint to your company’s operations that include its product features, pricing strategy, production quality, branding, marketing strategy, financials, and operational features.
Identify Your Target Market
To establish yourself in a niche market, you will need to identify your target market based on your customers’ values, beliefs, and passions.
Research Your Target Market
Research your target audience based on what defines your chosen niche such as age, profession, hobbies, needs, and values. Since niche markets are highly targeted you should know as much as possible about your target market to build a healthy customer base so that your business thrives.
Decide on Your Product or Service
Decide on your product and service that is highly sought by your niche audience. Your offering should be based on your segmented customer’s unique needs, preferences, or identify what makes it different from other products and services in the market.
Figure Out How Your Product Solves Your Target Market’s Problem?
Remember you are offering a solution that is under-served in the market. To market a niche you will need to put your finger on your customer’s problem and solve it. Successful niche industries find pressing customer problems and do something to solve them in a way that is convenient, cost-effective, and timely.
Determine How Profitable Your Niche Is
It’s clear cut if you don’t make profits in your business enterprise you risk losing money and shuttering your business. Your product and service should have enough demand, be well-positioned in the market, and be priced right to not only provide a steady income but also be profitable.
Create a Niche Marketing Plan
Unlike mass marketing, niche marketing is designed to attract a specific subset of customers. This entails carving out a small part of the market whose needs are not fulfilled by focusing on a small group of buyers, with products or services that stand out from the competition, attract the right amount of people to boost profits. Some of the things to include in your niche marketing plan:
- Your business objectives for your niche market
- Your Strengths, Weakness, Opportunites, and Threats (SWOT analysis) of your niche market
- Identifying who your potential competitions in your niche market
- Determine your Unique Selling Proposition (USP) which is the unique benefits that your company offers which stand out from the competition
- Target markets and customers in the niche market
- Market strategy in terms of product, price, promotion, people, and process
- Budget
- Marketing channel for marketing campaigns
Test Run Your Product
Before you go into full production mode and market a niche you will need to test whether your niche is profitable. Start small by introducing your product or service to your target market by running a campaign. Try to get feedback from customers who’ve made the first purchases to see what they think. This will help you make last-minute tweaks to your offering based on design, service delivery, and pricing to determine you are guaranteed a steady flow of sales at the prices that customers will be comfortable with.
Launch a Profitable Niche Business
To launch a successful niche business you will first need to identify an underserved segment of the market and tailor your products or services to them. You will also need to assess how you are going to market to this specific audience and keep tabs on your competition. And most importantly you will need to listen to your customers, ask them for feedback and rectify any mistakes immediately.
Is Apple a niche market?
Though initially, Apple was a niche market it has grown over the years to become a market leader in tech with a valuation of over $2 trillion.
Which is better niche or mass market?
For small businesses, a niche market is as ideal as it comes with advantages that include low costs on promotions and marketing; less competition; and potential for high profits.
What are the best niche markets?
Some of the best niche markets include food, eco-friendly products; home and office equipment; health and beauty; and pet products.
What niche is most profitable?
Some profitable niches include health and personal care; clothing and apparel; kitchen and groceries; office products; tools; and gaming.
Which niches are trending in 2021?
Some trending niches in 2021 include:
- Men’s Beauty Products
- Home Exercise Equipment
- Books
- Natural Feminine Care Products
- Pet Care
- Devices
Image: Depositphotos
This article, "What is a Niche Market?" was first published on Small Business Trends
via https://www.aiupnow.com
Samson Haileyesus, Khareem Sudlow
