⌚ 7 min read
If you’ve ever wondered if you really need to define a niche for your business (and if you’re secretly thinking it’s just some marketing nonsense), we’re laying it all out for you. Hint: the short answer is yes. You do need a niche!
Let’s say you run a business that sells mugs with cute designs and sayings you create yourself. At first you’re thinking that everyone drinks liquids and most people drink warm liquids, the whole world is your market!
You start creating all sorts of designs that will appeal to a wide variety of people. You set up your website and social media accounts and start posting content that will appeal to business people that live on coffee, stressed out college students, housewives, grandmas, athletes, and on and on.
You sell a few mugs here and there, but you’re not doing as well as you thought you would. Nowhere near market leader status. What happened?
A niche is a specific set of consumers who are in the market for a product or service a business sells. The product/service pointedly addresses the needs of these potential customers.
What are the benefits of selling to a niche market?
When a business focuses on selling specific products or services to a targeted set of customers rather than selling everything to everyone, they will save on costs over the long run, become more productive and efficient, differentiate themselves from competitors, and establish unique selling points that will successfully drive their marketing efforts.
Overall, it’s an important step in defining a brand’s positioning and making it the go-to brand in its niche market. Strong positioning is what ultimately attracts more customers to a brand.
Going back to our mug company example, instead of selling to every type of person out there, the owner decides to focus on one of their own passions and something she knows well - camping and the outdoors. She decides to create products that can go from office to campground seamlessly with designs that will appeal to a younger demographic. Her message becomes about finding adventures in everyday life, not just when exploring outdoors. Because she identified a specific type of customer, she was able to cut down on the number of designs she was offering and tailor her marketing more effectively.
By focusing on a smaller subsection (younger, quirky professionals who love the outdoors) of the overall market (people who use mugs), the mug business was able to spend less on production and marketing while bringing in more customers who strongly identified with the products.
The recipe is simple: market a product with specific benefits to an audience who strongly identifies with the problems/solutions being presented and you will make more sales.
Now it’s your turn. Follow the steps below.
Start with your own passions and interests.
Your business niche doesn’t have to align with your own preferences, but it does help when designing your product for the target audience’s needs and crafting a message that will resonate with them.
If you do decide to define a niche according to your own interests, consider the following:
Create a list of business ideas that stem from your skills or interests.
Get inside the customer’s head.
Think about the problems faced by the customers you will be selling to. How can your passion become a product or service that solves the customer’s problems? Think about what their motive to buy is.
The mug company focused on customers who wanted attractive and durable camping mugs that they could also use in their regular (not as exciting) lives to remind them of their weekend adventures.
Spend time researching and talking to those individuals that you will be targeting with the goal of finding out what’s going on in their heads. You may find surprising insights that you hadn’t initially considered that will affect your product or the market you choose to sell it to.
Find out who your competitors are.
You might have a great idea and niche, but how many other people had the same thing in mind?
Research to see what your competitors are offering. And competitors aren’t a bad thing! It’s actually a positive affirmation that the product or service has a viable market. You’ll want to think of ways to stand out from those competitors, but that’s a whole other topic (which we cover in our Foundations course, btw!).
Determine if the niche is profitable.
Once again having some competitors (but not too many) is a good indication that the market is profitable and there is room for your business to enter it.
When putting the finishing touches on your niche, keep in mind the following:
As far as pricing and profitability is concerned, start by checking out your competitors’ prices so you can price competitively and accordingly. Remember, lower is not always better!
Test it out.
Before you go full force ahead, it’s a smart idea to test the viability of your idea. Create a simple landing page offering a trial period or sample of your services or products. Market to your target audience by using paid ads. Note: you shouldn’t spend a ton of money on your test period but enough to see whether customers will bite.
If your test isn’t as successful as you thought it would be, go back to the drawing board and see what you can fix in your product or marketing tactics or how you can redefine the customer segments you’re targeting.
By defining a narrow market for your products and services, you will stretch your resources further, lower costs, and find those customers who will become loyal, championing your brand to others. The companies that nail selling to their defined niche have the best chances of becoming market leaders and finding mass market success.
Finding your niche is just one step in building a successful business. If you’re serious about changing your life and becoming the boss you’ve always wanted to be, learn more about OWB courses and how we will help you get there.