In an increasingly saturated marketplace, business owners are feeling more pressure than ever to grow their business by bringing in more customers. However, when this pressure leads business owners to be all things to all people, often the opposite of growth happens — stagnation, or worse, decline. This “we can do everything for everybody” approach to business can inadvertently leave you meaning little to most rather than meaning much to few. But when this spills over into your marketing efforts and your ads mention everything but the kitchen sink, it can become like that old expression, “when you are talking to everyone, you are talking to no one.”
It may seem counterintuitive, but doing the opposite — creating a clearly defined niche market strategy — can actually improve your business and increase your profitability.
Most businesses assume that narrowing their focus and audience would have a negative impact on their revenue, but that is not usually the case. Just as finding your business purpose helps you define why your business exists, defining your niche can help guide your strategy for products, marketing, and larger business decisions. Let’s dive into what a niche is, and how finding a niche market can help your business create more impact.
What is a Niche Market?
A “Niche” is defined as a specialized segment of a business market for a particular kind of product or service. Your niche is different from your target audience; however, it impacts who your target audience is (or, vice versa).
For each of these niches, you may have several target audience segments. For example, Swimply might appeal both to parents looking to entertain children and college students wanting to host a party.
Some effective niche marketing examples include:
- A chiropractor that focuses specifically on sports-related injuries
- A grocery store that specializes in eco-friendly products
- Swimply is an app that caters to a very niche segment of the property rental market – people who are just looking to rent swimming pools
Does focusing on a niche mean you need to turn away business? Not necessarily. If you are an orthopedist, you can see any patients that require care under your specialty. However, you may choose to focus your practice on repetitive use injuries, and so naturally narrow your marketing and target audiences to people who repeatedly make the same motions. It’s your decision whether you want to see patients who fall into other areas of orthopedic care.
Benefits of finding a niche market
Now that we understand what a niche is, let’s look at why finding a niche market can benefit your business.
1. Helps you to stand out
Operating within a niche helps potential customers easily identify what you do and why it’s different from what other businesses in the overall market do. Ultimately, for some, your specific niche may not be what they need, but for those consumers who DO want your product or service, it makes your appeal that much easier to spot. It also means that you have less competition. If someone is looking for grocery delivery, they are going to automatically rule out any retailer or service that doesn’t deliver, narrowing down competitors.
2. Authenticity
Studies consistently show that customers increasingly choose to work with businesses that embody values they can connect with. In narrowing the focus of your business, you are creating authenticity for your business by pouring your passion and expertise into a specific segment of the market. Authenticity also leads to increased repeat business, which is worth its weight in gold.
3. Save money and improve your marketing
In focusing on a particular niche, you will automatically narrow your target audience. Far from a bad thing, this helps you more effectively reach those people who will be most likely to purchase your product or service. There is a commonly referenced business axiom that 80% of your business comes from 20% of your customers. While that may not be the case for all businesses, we routinely advise our clients that you can’t be everything to everyone. Owning your niche makes it easier to narrow that audience, hone your marketing messaging, and cut out the fluff that isn’t helping sell your business.
4. Better decision-making abilities
When you have a Purpose for your business and a niche market, it simplifies the business decision-making process. Does this decision serve our ultimate purpose? Does it fit within our niche market? Is it something our target market wants? Your goals and audience are clearly defined, making your strategy clear.
How to find a niche market
We’ve already covered the first two steps towards finding your niche market: defining what a niche market is and understanding why it is beneficial to have one. Now let’s look into ways you can determine what your niche market is.
- Look for gaps in the marketplace
Businesses fall into markets, submarkets, and potentially, niche markets. Niche markets tend to specialize in an area where there is a gap in products or services for certain underserved or neglected audiences. Say your business makes children’s clothing, a significant submarket of the overall fashion industry. But after a board member’s niece has an accident, they notice a significant lack of options for children with disabilities. Thus, you may choose to refocus your children’s clothing business to create clothes specifically for children with disabilities, a niche market.
- Analyze your target audience
Another way to determine a niche is to look at your current target audience and identify a want or need for that audience or a subset of it that is not being met. Are people renting houses with pools just for access to the pool? What if you could have access to JUST the pool for cheaper? Swimply identified a desire in an existing audience and created a niche market just for them.
- Review your existing customers
As we stated earlier, it’s highly likely that a significant amount of your revenue comes from a small percentage of your customers. What do those customers want? Do they buy specific products? Poll your ideal, repeat customers and find out the best products or services that will make them happy, and then focus on that.
Let us help develop your niche marketing strategy
Still having difficulty determining your unique contributions to your industry? Red Thread Brands can help you: define your business purpose (what gets you out of bed in the morning); determine who your core audience is, the ones who matter most to your bottom line; develop messaging that communicates your unique value to your customers; custom-build marketing strategies to get your message to the right people.