One of the most common and proven paths to success for many small businesses is to find a niche market and establish a dominant position in that niche.
There are segments of the population that share particular needs or problems and that require specific products or services to solve their problems This is what a niche is: a specialization in a specific area of a broader market that you can serve to differentiate your business from the competition. And it’s the place where a small business can penetrate the market.
If you are starting your own business, you should find a niche in your industry or sector that has unmet needs. How can you find such a niche? How can you identify your targeted market? You’ll need deep market research and, with this guide, we want to provide you with the knowledge you need to successfully find your niche in business.
What is a business niche and why IT’s important to find yours
A business niche is an area in the current market where your business will be appreciated by a select group of customers or audiences. Finding a niche differentiates your business from the competition and allows you to excel in your sector.
The ideal market niche is the one that is targeted to a group of people who share a need that is unmet or a problem that is unsolved. If with your business you are able to provide them with a solution to their problems, you can have a great chance of success. Today, with millions of businesses crowding the market, it can be difficult to find a niche that is not served by anyone else but you. In this case, you need to make sure to provide a unique and better solution to the problem than your competitors.
Finding a niche would also help you build a loyal audience. A solid market niche helps to ensure that a particular group of customers will want to buy from your business instead of going to the competition.
Finally, in some cases creating a business in a narrow niche market can give you the possibility to charge higher rates for your products or services.
An example of a niche market
Still struggling to understand what’s a business niche and why it’s extremely important for your success? Let’s make an example. In each industry, there are several niche markets.
The diaper industry is a wide industry, there are diapers brands that are dominating the market for years. But what could be a specific need of a specific group of people, in this case, parents? Persons, some of them are struggling to find the time and energy to physically go to the supermarket and buy them. So, what about a service that delivers diapers at home in our town? We have just identified a specific need and come up with a specific solution to it. We’ve just identified a market niche. And what kind of advantages can our business have since we’ve identified its market niche?
- We’ve distinguished ourselves by competitors. People will still purchase diapers of their favorite brands, but they’ll receive them periodically at their home. They won’t have to remember buying them or going to the store.
- There’s a high chance that our customers would become regular.
- We can start small and grow up gradually (now we provide our service in our town, tomorrow we’ll wide our range).
- Our audience is very specific (new parents): marketing strategies, advertising campaigns will be aimed exclusively at them – it’ll be easier and cheaper.
How to identify a business niche?
There are a few key elements that you should consider when trying to identify and dominate a niche market. When doing your market research, focus on audiences that feature these characteristics:
- Easily identifiable customers. You should be able to identify your targeted customers easily. When thinking about your business niche, you should be able to address the problem/need your product or service is meant to solve/meet. If you struggle too much to identify these simple elements, your niche is too wide or completely improper.
- Easily accessible customers. For a business niche to be profitable, your potential customers must be accessible, and accessing must be affordable. There is no point in being able to provide a solution for Desert Nomad’s sunburn if you can’t find a way to reach them easily and affordably.
- Underserved market. Many markets become oversaturated with small businesses or startups. If you want to stand out in your niche, find a sector of the market that is unserved or even neglected. If you use Google Analytics or AdWords to find searches that are not returning results, you can easily get an idea of what are the markets or groups whose needs are not being met.
- Large potential market. It’s okay to choose a narrow market niche, but it must have large potential. For your business to be profitable, your market and niche must be large enough that you can make money selling your products and services. Your niche must be narrow in the sense that it must identify a specific need or problem, but the pool of potential customers must be large enough to allow you to sell products or provide your service enough to earn an actual income.
What is a niche strategy?
Now that you know what a business niche is, let’s see the 5-step strategy to create a niche for your business.
a. Select your target audience
Identify an unmet need or an unsolved problem and identify your niche. Analyze your targeted audience and try to identify the gaps in the market. Also, choose a sector that anticipates growth.
b. Research your customer base
Understand your audience’s needs, goals, motivations, frustrations, and expectations. You should do so when you are starting your business, but also perform regular research to reassess your customer base.
c. Create your business plan
Create a business in which you define exactly what you’ll provide and the need you are going to meet.
d. Market your specific audience
Your marketing efforts should be focused on your targeted audience. Ads and blog posts are invaluable tools for getting your message out to people likely to be interested in your business.
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