Very few entrepreneurs will ever be privileged to invent a completely new product or service. It’s either too difficult to come up with an original business idea or it is prohibitively capital and research intensive to be the first one on uncharted terrain (commercial space travel, anyone). To add insult to injury, innovators such as Motorola (creator of first handheld mobile phone) usually find themselves overtaken by later entrants to the market and let’s face it, most enterprises would choose market leadership status over first to market status, hands down.
So how does one get a good slice of market share without constantly worrying about competition? The short answer is that you can’t. There will always be some amount of competition. However finding a niche market makes life simpler. Though it appears that by electing to serve a niche you have reduced your market base and profit levels, the reality is that capturing a large market when you are a small player is highly elusive. A niche market focused strategy gives you better odds of dominating a larger share of a smaller market because you are catering specially to this market’s needs.
How does one find or create a niche market? There are several good articles on the internet that offer good insight on identifying a niche. We however believe the following are three key attributes of a profitable niche market:-
- You know and understand these people. They are your tribe: The concerns and interests of the people who comprise your niche should not be foreign to you. If for example you are selling physical training services to over modestly active persons over 50, you should be attuned to the group’s goals and obstacles to goal attainment. You would know that though it is carnival season a programme highlighting sexy abs and rapid fire weight loss would not electrify your clients.
- They have the means to buy your product/service at a price that returns a profit: May seem obvious but it is worth stating. Your niche must be able to pay for your product. No sense in marketing high end coffees and teas to a niche that is primarily value driven in terms of their food choices and purchases. They may purchase once or twice but never on the consistent basis necessary to make your business sustainable.
- The niche is large enough to sustain a business long term: It may be tempting to define a niche that is so particular that you are one of a handful of businesses catering to that market. However you need to ensure that either you are selling a product that this highly specialized niche needs on a frequent basis ( so you make money on repeat sales ) or that the niche is still large enough that even sales from a small number of the niche are enough to support the business. After all there is a reason why no-one has heard of a successful hardware store selling only novelty tools for women.
Recently, a good friend of mine, a fitness trainer and incidentally a marketing professional, told me about her plans to start a fitness programme centred on walking. In the hyper -intense world of Crossfit and Alcatraz classes, I was not convinced that anybody would be interested in something so hum drum as walking. Turns out I was wrong. Two days after she started advertising her programme, several persons called expressing an interest in the classes. Each of the callers fit to a tee the profile of her target market. I was blown away. Clearly she knew her niche.
So there you have it. Happy niche hunting!