7 STEPS TO DEFINING YOUR NICHE MARKET

Let’s say you’ve figured out a great idea for a new product or to start your own business, and you have the firm belief that it will take the world by storm. Before you go any further, the next step is figuring out just who your market is.

It is not as intuitive as one might assume. Not understanding the target market segment and the branding process that would provide the most value for that segment, is an all too common mistake even the biggest brands make. Think of the “Pepsi Max” epic fail.

There are two basic markets you can sell to: consumer (B2C) and business (B2B). Bearing in mind that no business can be all things to all people, the more narrowly a marketer can define his target market, the better he can customize his product and message to fit within his target’s aspirations and needs.

This process is known as creating a niche and is key to success for even the biggest companies. Carrefour and Tiffany are both retailers, but they have very different niches: Carrefour caters to bargain-minded shoppers, while Tiffany appeals to upscale jewelry consumers.

Contrary to common belief, niches are not ready-made, they must be carefully crafted. Rather than creating a profitable niche, many CMOs make the mistake of falling into the “all over the map” trap, claiming they can do many things and be good at all of them. These people quickly learn a tough lesson, that smaller is bigger in business, and smaller is not all over the map; it’s highly focused.

Crafting a potential niche,  involves following a seven-step process:

I’ve recently been struck by the sheer amount of affiliate gurus using “dog training” in their examples.

Have you ever wondered why that is? Did they all get together at a secret pow-wow and decide this is going to be the standard niche they’re going to give away?

In basic terms, a niche is a specialized market. When you think about dog training, it’s not very “niche”. It’s absolutely massive – which means there’s plenty of room in the market for more affiliates to come on board.

However, it’s when you drill down into the hundreds or thousands of sub niches and micro niches within dog training that you can uncover some brilliant opportunities.

Sure you could compete in the broader dog training mega-niche but how much money do you have to spend? By going more “niche” within dog training you can target receptive audiences at a much lower cost, for greater profits.

Let’s look at the many advantages of marketing to a select, niche market.

Why you should become a niche marketer

More profits in the bank is one of the main reasons to direct your efforts at niche marketing. It’s a highly effective method to reap a greater return on your investment.

Here are some of the other advantages and benefits you’d enjoy as a niche marketer:

  1. You can focus on one specialty and simplify your business.
  2. Distinguish yourself as an authority in the field – the person or site to turn to. Having this distinction also helps prospective customers to find you.
  3. Even if you’re not an authority on the subject, you’ll be advancing your knowledge in the process of researching and marketing your chosen niche. If you’re already an expert, then you have the opportunity to perfect your skills and make use of your knowledge. See your abilities expand and gain confidence as a professional!
  4. Enjoy credibility – you’re marketing your web site as a “specialist”, not a “generalist”. You gain the trust of your customers and build up loyal clientele and customer referrals.
  5. Far easier to research a specialized target market – find out when to reach them, where to reach them and how to reach your potential customers.
  6. Serve your customers’ needs better within a small focused group, rather than trying to cater to the wider market with a shotgun approach. Avoid the “market to everyone, sell to no one” mistake.
  7. There is an exclusive “club” mentality which gives you a closer and longer-term relationship with customers, fosters connections between your customers that keeps them coming back (eg. forum participation) and gives you more customer loyalty.
  8. Higher pricing model – you can charge more as an expert in your field. Limited or specialist products/services means buyers expect to pay more and are willing to go the extra mile to get it. What you’re offering is special. Your prospects’ price resistance is negligible.
  9. Considerably reduced competition – better chance of ranking higher naturally and through paid advertising. Additionally, existing competitors within small niches sometimes have only a basic understanding of SEO and marketing their business, which gives you an added advantage over them.
  10. Significantly cut your marketing costs – you won’t be mass producing general ads for a wider audience; you’ll be zeroing in on your target market with pin-point precise marketing. You’ll be marketing to qualified prospects who have a special interest in your offering.
  11. Be even more unique and tailor your product/s or build a special package that caters for your target market. You can be more creative and competitive with your offering as a niche marketer.
  12. It’s much easier for you to roll with new trends and change your site to market the latest and greatest to your focus market.
  13. The more unique your offering means that general competition can ignore you and even turn into sources of referrals that send business your way.
  14. Long-term future business – catering to a specialized market helps to be more memorable to customers in future, whether they purchase straight away or not. If they don’t, make sure you have an opt-in to catch them later and build your email list!
  15. Lastly, if you pick a niche that you’re passionate about – you’ll enjoy meaningful work and it’ll be far more fulfilling. You’ll also attract like-minded people that you’ll enjoy dealing with.

As you can see, there are numerous advantages to being a niche marketer, and all of these perks add up to better return for your dollars, and hopefully more fun in doing it!
Why niche marketing can fail

Now that we know why niche marketing works, it’s time to look at why it can also fail so you can be wary of the traps and avoid making expensive mistakes.

These are the main reasons why you can fail as a niche marketer:

  1. Marketing a product – not a niche. One of the tricks with niche marketing is to find the “market” first, then find or create an offering that serves the market. You’re not starting with a product and then trying to find people interested in buying it.
  2. Choosing too large or too small a niche. If you don’t specialize enough, you’ll find you can’t meet the needs of your prospective customers and they’ll look elsewhere. Too small a segment means although you may build clientele and make money, it won’t be a big enough slice of the pie to generate serious income.
  3. Lack of market research – not identifying what your market is looking for, where they’re looking and how to talk to them. Without accurate information you’re just taking a stab in the dark and you could be lucky, but mostly it’d be wasting your precious time (and money later).
  4. Not using the information you’ve researched properly. It’s not what you’ve got – it’s how you use it. Make the most of your hard work in researching your target market by speaking their language and marketing to them effectively. Otherwise you’ll lose your money as well as research time.
  5. Lack of niche know-how and/or technical expertise. No one expects you to know everything there is to know. If you’ve got the niche expertise, but not the technical know-how (or vice versa) find someone who does. You can even partner up with someone who has complementing skills.
  6. Not providing value – if you don’t offer valuable content and a solid reason for prospects to buy from you and customers to keep coming back – then they won’t!
  7. Lack of willingness and the commitment to make it work. Niche marketing does require some time investment, analysis and work on your part – it’s not a get rich quick scheme (although it does help to strike it lucky!)
  8. On that note – thinking short-term, rather than seeing the long-term “big picture”.  While there may be trends within micro niches, you don’t want to pick a niche that’s just a trend if you want long-term gains. You’re building a lasting business that you want to generate income for you in many years to come. Keep the mindset that you’re investing in your own business (both money and time) for financial independence – permanently!