(3 Simple Steps)
The term ‘niche’ has become such a cliché that new entrepreneurs either misunderstand the word or underestimate its importance in effective business marketing, positioning and planning.
We’re here to clarify what a niche actually is and explain why having one is so important. Don’t worry, it’s not as dense or complex as you might think. Let’s dig in!
A niche is a focused, targetable portion of a market— not the general population of consumers in a market.
Many small businesses just don’t know what to aim for or who to target when they’re marketing, so they try a little bit of everything and end up frustrated when they don’t get the results they expect. This chaotic method can be extremely costly and ineffective, especially for self-employed, newly registered small-business owners who don’t have huge marketing budgets.
Don’t let this be you! Take a second and think about your perfect client. Describe who they are, and don’t start by saying,
If you can only describe your target customer in those words, you’re headed for trouble because that’s far,
Think of marketing as the opposite of archery. In the business world, smaller targets are easier to hit. The more diverse of a group you try to appeal to, the harder it’ll be to catch their attention. So remember, aim for the smaller targets— you can rule your niche, but you’ll never rule the entire market.
No one wants to work with a “Jack of all trades, master of none,” or hire someone who says “I’ll do anything for a buck!” People want to work with specialists, not generalists. They want someone with the reputation of “THE” person, even if they can’t afford them.
Choosing a niche helps you build your reputation as a specialist, which will work wonders for your brand image. Plus, narrowing your market will increase profits and decrease competition!
You may be thinking that your industry doesn’t have any niche options, but in reality everyone has the potential to specialize. For example, a masseuse could specialize in athletic massage, pregnancy massage, chronic-pain massage… you get the picture. What’s the point, you’re wondering?
If you specialize…
Matt Horwitz, creator of LLC University, is an excellent example of a specialist. His website is a comprehensive resource specifically for forming an LLC. That’s what he knows, and he’s stuck to it—and it’s paid off!
It’s time for you to find the best, most profitable niche available. If you’re an existing business, you have the option to choose a niche based on your existing information—i.e. your client history. Take a look at your past and current clients and ask:
Let’s say you’re a landscaper, and from your client list you conclude that the bulk of your business comes from single, elderly women. Great! Here’s why this could work as a niche:
That’s all well and good, but what if you’re just starting out?
Obviously you won’t be able to use a customer list, but you probably have some experience in your field. Make an informed decision based on your knowledge of your industry. Do some research about what your competitors specialize in and niche markets that are already locked down. Gather as much information as you can and choose your niche based on facts and figures—not just a gut feeling.
Here are a few guidelines to go by when you’re choosing a profitable niche. Your niche must:
Wouldn’t it be nice to find a niche no one else has discovered yet? Wouldn’t it be fantastic to have no competition whatsoever? Yes, it’s a lovely fantasy—but don’t waste your time on it.
Finding a niche that no other company is working in is super rare. Don’t be afraid of a little competition! It’s part of the business world, and it’ll make you a better businessperson. You’ll try a little harder to get clients, and put in some extra effort to keep them happy.
Let’s say you want to open a dance academy, but there are already 4 well-established ones in town. This isn’t a reason not to open a dance academy. It means that your market is big enough to support 4 dance academies, and that the town’s interested in dancing!
Think about your area and consider what aspect of your industry you could dominate, even with the existing competition. Do your research on your competitors to get an understanding of what’s already available, and where you could sneak in and capture a piece of that market. Create a plan for how to dominate – then see it through!
It’s so easy to revert to “Anyone, Someone, and Everyone” when you’re desperate for money. Just breathe, and remember that in the long run it’ll be much better for your business to focus your marketing on one niche group. Don’t make a marketing decision out of stress or fear. Remember, you can always branch out and focus on multiple niches later on.
No, you can’t. If you try to sell to everybody then you won’t engage anybody. This doesn’t mean you should forbid anyone from buying your product, just that you need to define your target audience.
As Jerry Rackley, chief analyst at marketing firm Demand Metric Research, said, “If you can’t put your ideal customers into an identifiable segment, your business plan is a no-go.”
In other words, if your niche is impossible to define, it’ll be impossible to target, and your business will suffer. After all, if you can’t figure out how to reach your target audience how do you expect to sell to them?
“Okay, I’ll Target thin Women Between 18-26 Who Like Dressing Well”
Yes, you need a category that you can define, but that doesn’t mean you should choose one that everybody knows about. There are ways to survive in a competitive industry, but why make it harder on yourself when you can search for a niche that other people haven’t thought much about? It’s important to be creative here.
Don’t just run with the herd. Yes, there are some cool market-segments out there, but odds are everyone’s going to be piling into them (making for cutthroat competition). It’s a better idea to choose something less cool/trendy but where there’s still money to be made. That’s why the garbage collecting business is such a profitable racket in so many places—nobody wants to do the dirty work. Where’s the neglected niche in your market?
“Okay, Middle Aged Men Suffering from Ghost Limb Syndrome.”
Remember that you have to make sure your market is large enough to sustain your business. However lucrative the segment might be, if there are only ten people in it you’re not going to be able to stay afloat.
You’d be surprised how many people don’t do this basic market research. In order to know how to stay profitable, you have to know how many people there are in the market and if there is any risk of saturation. If people keep dropping in and out of the market, or your product needs to be replaced regularly, there’s little risk of saturation. On the other hand, if the market remains constant and your product stays useable, you’ll end up going the way of Crocks!
“Elderly People Falling Behind Modern Technology.”
The final piece of the puzzle is ensuring that your niche has serious growth potential. “Elderly people falling behind modern technology,” for example, certainly has the potential to grow and expand.
This means that even if other companies figure out and join your niche, you’re still in a position to grow nicely. Even better, if you become a market leader you’ll be able to vacuum up more and more of these new customers as they enter the niche!
Unless you’re in the business of selling something nobody wants, you’re going to have competitors.
If you have the best product or service in the world but nobody knows about it, you’ll be broke. If you have the best product or service but nobody can tell it apart from your competition’s, you’ll be broke. If you have the best product or service but nobody can remember your brand, you’ll be broke.
Jack Welch famously said,
“If you don’t have a competitive advantage, don’t compete.”
And we can add,
“If you can’t protect your competitive advantage, you won’t keep your competitive advantage.”
Having a competitive advantage means being able to legitimately claim, “We are the only X that does Y.” It’s not enough to just be better—ideally, you want to have a truly unique product. The problem is, coming up with a never-been-done-before idea is tough, and making sure no one else copies your idea ranges from very expensive to downright impossible.
When push comes to shove, it’s really not about your product or service anymore—it’s about packaging, branding and marketing.
Take a Ford advertisement, for example. It closes with the statement, “Only Ford has Ecoboost fuel economy!” The ad never explains what Ecoboost fuel economy is or how it’s better (if at all) from other options on the market. What matters is that they’re the only car manufacturer that has it.
Wondering what would stop Honda from making the same claim? Turns out, Ford trademarked it so no other car manufacturer can use the term “Ecoboost.” Ford didn’t need to invent a revolutionary type of engine or new fuel saving technology. All they had to do was come up with a name for whatever technology they already had and trademark it.
Here’s how this strategy works:
Trademark protection a very powerful tool for building and protecting your competitive advantage, but it’s also very inexpensive. Think carefully about what clever branding and packaging could give your business the edge it needs to dominate your niche.
How well you can harness this information and flex your creative muscles?