What is a niche strategy?
Now that you know what a niche market is, how do you create a business niche for your company? We Walters and Woodley to create a five-step niche strategy for entrepreneurs to follow.
- Select your target audience. To identify your niche, you can begin by selecting the general market. Woodley said a good approach is to focus on an area where you are knowledgeable, and then identify subtopics within that.
- Define an unmet or underserved need. Analyse your target audience and identify gaps in the marketplace. Walters said your products or services should soothe a pain point that your audience is currently experiencing. Choose a sector that also has anticipated growth.
Experts said there are a few key consumer elements that entrepreneurs should consider when trying to identify and dominate a niche market. Look for the following characteristics in your potential market audience.
1. Easily identifiable customers
Potential customers who are easy to see are a hallmark of a great business niche. Jerry Rackley, chief analyst at marketing research and advisory firm Demand Metric, said it should be easy to identify who would do business with you based on a set of reliable characteristics. “If you can’t put your ideal customers into an identifiable segment, your business plan is a no-go.”
2. Easily accessible customers
For a business niche to be profitable, your potential customers must also be accessible, and accessing them must be affordable, Rackley said. Otherwise, your great idea will be dead in the water.
“For example, I might develop an ideal solution for nomadic goatherders in Outer Mongolia, but I have no way of reaching them with information about my solution,” Rackley said. “Lack of accessibility is also a business plan no-go.”
3. An underserved or advance market
Many markets become oversaturated with small businesses or start-ups eager to get in on the action. But for a business niche to really stand out, it should be underserved or even, said Cody McLain, CEO and founder of Wire Fuse Media and productivity podcast.
“In my experiences with hosting companies, there are often underserved or completely advance markets, as well as markets that are being poorly served,” said McLain, who suggests researching these markets in your industry as potential niches. “For example, in web hosting, you can use Analytics to find searches that are not returning results to find markets or groups whose needs are not being met. Another way to find your niche is to search consumer ratings indexes and sites to find areas with poor customer service.”
4. A large potential market
For your business to be profitable, your market and niche must be large enough that you can make money selling your products and services.
“In addition to identifying and accessing potential customers, there has to be enough of them,” Rackley said. “The potential market for any business must have the size and mass to the investment to enter that market.”
Rackley gave the example of “a great solution for any human who has ever walked on the surface of the moon.” While it might be easy to identify and even gain access to moonwalkers, currently there just aren’t enough of them to qualify this as a great business niche. A small pool of potential customers means little or no growth potential, which is another critical characteristic of a profitable business niche.