Niche Marketing Strategy
Entrepreneurs are known to be voracious readers – a quality that serves them well in the formative stages of launching a business. If you share this love of devouring information from knowledgeable sources, then you too have probably heard from scores of sources far and wide – from marketing textbooks to expert business mentors – to narrow the focus of your business.
However, if you're like many small business owners, you heard this advice and then did an about-face to do things your own way. This is a natural inclination – many small business owners feel skittish about excluding anyone from their service offerings, so they intentionally keep their options wide open, marketing to everyone they can. This preference commingles with a financial reality: In the early years, many small business owners simply cannot afford to limit their scope as they establish a loyal client base.
If you're past the “settling in” stage of your business, you may be on the threshold of revisiting your earlier trepidation. Now, when you read an article about niche marketing from the U.S. Small Business Administration, you request information about how to find a niche market. When your marketing team broaches the subject, you surprise them by changing course and asking them to do some investigatory work on your behalf. And maybe when your accountant, cautious by nature, raises his eyebrows about these developments, you remind him that he started his CPA practice with the intention of “serving everybody,” but currently specializes in advising small business owners like yourself.
From any vantage point, the signs are clear: You may be ready to embrace a niche strategy for your small business.
Begin Your Learning Curve
If niche marketing has captured your full attention, you'll want to ensure that you:
- Are able to identify successful niche marketing examples around you.
- Understand the characteristics of niche markets.
- Appreciate the benefits of niche marketing.
- Balance the benefits against the potential limitations.* Learn how to find a niche market for your small business.
Supply a sturdy foundation for your learning curve by ensuring that you know what niche marketing is, though you're probably on the right track. After all, your niche in life – be it computer technology, writing, financial advising, catering – probably compelled you to build a small business around it so you could fully indulge your passion.
One design company provides a useful definition, saying that niche marketing is: “A targeted marketing plan that focuses on one particular section of the market that has high potential to connect with a product or service.”
Interestingly, even the American Marketing Association is showing some signs of hipness in using the word “nicher,” as in “market nicher strategies.” It defines a niche strategy as: “A game plan employed by a firm that specializes in serving particular market segments in order to avoid clashing with the major competitors in the market. 'Nichers' pursue market segments that are of sufficient size to be profitable while at the same time are of less interest to the major competitors.”
As you settle on your own definition, a certain irony may strike you: For the same reason some fledgling small business owners blanch at being called “small” – perhaps associating it with a “small-time enterprise” – many people associate “niche” with small too. As you have learned by now, it does no good to think in such negative terms. If the thought ever crosses your mind, consider some pointed advice from a marketing company: “Rather than equate niche with 'small,' think 'refined'” – just like the hypothetical CPA who has decided he has an affinity for working with small business owners.
Spot Successful Market Nichers
Many companies – both small and large – saw the wisdom in taking their basic product or service offering and refining it to a more select audience. Examples of successful market niches can be found everywhere and are perhaps most common in grocery stores – think of all the organic, gluten-free and low-sugar offerings that were not on shelves even 10 years ago.
Niche marketing opportunities are created, spawned by someone spotting an opportunity to fill a gap or serve a need in the marketplace_._ As you look around your business community for examples, you might see:
These are all examples of market nicher strategies, which invariably surfaced after a great deal of market research. Such research holds the potential to revolutionize a small business, especially when it exposes choices, as in:
When a Market Niche Strategy Works
These niche marketing examples, and others like them, share some distinguishing characteristics:
- The businesses are large enough to be profitable, but not so big that competitors can easily swoop in and seize the advantage. Small business owners are sometimes maligned as being a supremely confident bunch, so sure of their ability to provide a product or service better than anybody else. But that quality, if it exists, is necessary to succeed at niche marketing. It leaves no room for error or oversight.
- They serve as a virtual showcase for a product or service that is superior or unique compared with anything else that can be found on the market. (The good news? Because niche markets are inherently small, the business owner can often set – and get – above-average prices. Consumers have shown that they're willing to pay more for products or services with high perceived value.)
- They tip the balance of supply and demand in favor of demand – always. This means that demand should always exceed supply – not to the point that customers get frustrated waiting and give up, but long enough to reinforce the idea that they've found a truly enviable product. Consumers will wait when something is worth waiting for. To leaven these forces, the most successful niche marketing strategies aim to produce year-round sales.* They include customer profiles that are honed to near perfection. Serving a specialized market, and serving it flawlessly, requires a probing, in-depth analysis of its demographic and psychographic qualities.
Size Up Niche Strategy Benefits
Developing a market nicher strategy holds the promise of delivering results above and beyond what you have vested in your present marketing plan. Of course, no benefit is guaranteed, but the payoffs could take the form of:
- Less competition, allowing you to focus fully on your customers and your offering, not on monitoring the competition.
-
Intense brand loyalty –
when you engage with fewer people, you should be able to give them more quality attention too. Customers return such regard with loyalty. Higher profit margins because, as you know, customers are happy to have found a niche product or service and are willing to pay more for it. A cost-efficient use of marketing dollars because you're targeting a narrow, rather than vast, audience. Some marketing professionals say business owners can expect to spend less money on niche marketing for the same reason. But this may not hold true; some business owners devote vast sums to niche marketing. Either way, while you may not spend less money on marketing and advertising overall, a market nicher strategy should allow you to see exactly what you're deriving from your money. Your return on investment should be clear. Positioning your product or service as the “gold standard” – the undeniable dream of every small business owner. Positioning you, as the brains behind that superb product or service, as an exalted authority – the ability to enjoy being a big fish in a small pond. Improved word-of-mouth marketing, with or without an assist from social media. The fact is, consumers with very specific needs or wants – niche consumers – share information with other niche consumers. Increased visibility and, by extension, a wake-up call to engage new customers. The media love to profile businesses that have learned how to find a niche market (especially if a persistent marketing team has been prodding them).
Balance Niche Strategy Limitations
As with the potential benefits, the limitations of a market nicher strategy are no certainty, either, but could take the form of:
- Limited growth within the niche market. This drawback exists precisely because the market is smaller and more specialized. It's also why most businesses maintain their core product or service offering simultaneously; the two can balance each other out.* Vociferous competition, if and when it does arrive. Chances are good that your competitors are actively searching for niche marketing opportunities. So if you beat them to the punch, they could flex their muscle, especially if they have the resources. (Hint: Creating brand loyalty early on can help counteract marketing bullies.)
- A heightened reliance on marketing. You may not agree that this is a limitation, especially if you have a talented and diligent team behind you. But a marketing tactic gone awry can often be corrected if it's aimed at a mass audience. A nicher strategy pivots on using the right words, at the right time, to the right consumer to make exactly the right connection. Your marketing aim must have laser focus.* The risk of a market niche being short-lived. Otherwise known as a fad, a product or service can electrify consumers and then fizzle just as fast. Of course, certain tech products were greeted with such skepticism, and then defied the odds. In the “never can tell for sure” world of marketing, continuous consumer research provides both protection against missteps and insights about new niche markets.
How to Find a Niche Market
At this point, you're probably either electrified by the prospect of identifying a niche market – or not. And, as you know from other marketing initiatives, seldom does an idea strike like a thunderbolt, out of nowhere. It happens, but identifying a lucrative, long-term niche market usually takes work – another way of saying “research” and then “fine-tuning,” and usually lots of both.
The University of Maryland offers some pointed advice about where small business owners can begin the process: “Niche marketing requires that you focus your business on a targeted segment of the population such as a specific geographic region, a particular demographic group or a group of people with shared interests.”
In other words, begin with those all-important demographics and psychographics, and ask:
- What do these consumers need? What do these consumers want to make their lives easier/better/happier? What can I provide them that nobody else can? What criticisms are they registering that could be converted into opportunities? What other (non-competing) products or services are resonating with them, and why?
Study competing businesses too, for insights. They can reveal a treasure trove of information that is easy to overlook when your focus is, rightfully, on your own business.
At the very least, you'll understand why so many small business owners are talking about market nicher strategies and how to find a niche market worth developing. Like you, they may be ready to make the leap from being a small fish in a big pond to a big fish in a small pond. All you have to do is reel in the right idea.
References
Writer Bio
Mary Wroblewski earned a master's degree with high honors in communications and has worked as a reporter and editor in two Chicago newsrooms. Then she launched her own small business, which specialized in assisting small business owners with “all things marketing” – from drafting a marketing plan and writing website copy to crafting media plans and developing email campaigns. Mary writes extensively about small business issues and especially “all things marketing.”