Many people in the business world have heard that they should focus on their most profitable niche to get ahead of the competition. They are told that it is better to be a big fish in a small pond than a small fish in a big pond. The problem I have found is that many business owners are not quite sure if they are servicing a niche or a market. Many are not sure if they are identifying the best niche markets in their field. Here’s how to identify niche markets that are profitable for your business.
What is a niche?
A niche is a segment of a market that is focused on a key area of that market. If the market is comic books and you found that 35% of the comic book market like science fiction, you have identified a niche within the market. Niches are a focused segment of a market with its own sub group of buyers who are passionately interested in that easily identifiable slice of the market.
How do they differ from markets?
Some business owners do confuse the niche with the market. For example, a business owner might be selling shoes and consider women’s shoes to be a niche. The truth is that women’s shoes would still be considered a market while stiletto heeled shoes might be considered a niche within the women’s shoe market. Another niche might be women’s orthopedic shoes or women’s stiletto heeled orthopedic shoes.
It is important to do the research into your market’s niches to identify the “hungry buyers”. It does not make sense (or dollars for that matter) to dream up a niche for your market and pursue it without checking the tastes and desires of the market first. Many business owners still believe in the fallacy of building a better mouse trap. It is better and less costly to find out if your market has a mouse problem in the first place.
What is a market?
Why is so difficult to differentiate between a market and its niches? It really comes down to knowing the consumers and their tastes. If you sell chicken dinners and you have identified a large enough segment of chicken lovers in your area who love giblets, service that segment. Look at the subsets in your consumers buying habits for profitable niche ideas. Remember that the market is any structure that allows buyers and sellers to exchange any type of goods, services and information. You want to drill down into the market to find the subset of that market in order to service its buyers more efficiently.
How to know if there are buyers for a niche?
There are many ways to identify buyers for a particular niche; one of the simplest ways is to find other sellers for that niche product of service. If there are businesses advertising products and services for the niche market, you have identified a viable market. Now let’s take it to the next step and look for the buyers:
Does the product or service have Television commercials?
Are they being advertised on the radio?
Are there books and or magazines dedicated to that particular niche?
How many ads can you identify online for that niche segment?
If you went back to the online ads and clicked the links in a month, will they still be there?
How old are the companies who are selling the niche products or services?
Researching you niche markets
The best way to research your niche market segments is to go online and check the search engines. If you can find viable search results with monthly numbers that run into the millions, you have a market for your product or service. If you can narrow your focus to keywords that garner around 10,000 to 25,000 monthly searches, you have a good shot at keeping your ad budget low. Look for competitive pricing in Pay-Per-Click rates and watch your competition. If you see that others are actually selling goods, but the competition is not making the prospect of jumping in a financial suicide mission, then it’s time to test the market.