While aiming for mass-market appeal is often seen as a sound business strategy, one of the major roadblocks to success is the fact that you’ll be competing against hundreds of other companies who are doing exactly the same thing.
Targeting niche markets, on the other hand, means you’re working with a much smaller customer base. On the face of it, it may seem this is a sure-fire way to reduce your profits – but don’t forget that niche markets are a much less congested space in which you can make your brand known.
Businesses operating in smaller markets are often more visible, better able to adapt to the needs of their customers and, perhaps most importantly, rewarded with a higher degree of customer loyalty if they manage to deliver an excellent service. Therefore, it helps to consider some of the ways you can succeed in a niche market, as well as examining some of the companies that have done the same – and how they did it.
The best place to start is with market research: if you know what your potential customers want, where and how they buy, and whether you’re equipped to deliver what they expect, you’re already halfway to staking your claim on a small market space. This also allows you to craft a brand that resonates with the segment of the population that is most likely to buy your products or services.
Consider the following questions:
- Can I identify prospects within the market that I can communicate with?
- Do these prospects need or have a strong desire for what my business offers?
- Is my offering suitably priced for this market? (If not, can it be?)
- Can I communicate a sales message to this market?
- Is this market large enough to support my business?
If you can answer “yes” to all of these, chances are you’ve found your market!
The more specialised your focus is, the better – customers will appreciate feeling that you’re fulfilling a specific need they have, and will be more likely to go back to you in future.
For instance, suppose you want to set up a business selling retro video game equipment and memorabilia. There may be more companies who sell retro electronics in general, but by specialising in video games you’ve narrowed your audience down to a smaller, but more concentrated and dedicated segment. You can easily find your audience on fan forums and at conventions, you already know that they want what you’re selling, and your pricing can be worked out according to the supply and demand of your commodities.
A more complex example would be a business like Castle Cover, an insurance broker which exclusively targets over-50s. As the cost of many insurance policies varies dramatically according to the age of the policyholder, they have identified a segment that benefits from specialisation and can be marketed to accordingly.
Positioning yourself as the go-to company for an entire age group can be a risky strategy, but the payoff can be huge if it’s skilfully handled. Doing your business in a niche space also offers a number of advantages in some of the more technical and recently-evolved fields of marketing: namely search engine optimisation (SEO).
SEO – the science of increasing a company’s visibility on major search engines like Google – has become the cornerstone of many businesses trying to make their mark on an increasingly crowded online space. For broadly the same reasons that it’s easier to stand out in a narrower marketplace, it’s also easier to rank more highly for terms such as “student internet dating” than it is for just “internet dating”.
Another benefit of operating in a niche market: the more business you do, the more you learn about your clientele. Analysing customer data to find trends that can be used as springboards for future strategies is much less complicated when your customers are a small group who tend to share similar traits, rather than the populace at large. Any new initiatives you put in place to boost business can therefore have a much more dramatic impact – and could even cement your position as the market leader in your chosen field.