Niche marketing is the norm for many small business owners, no matter what they are selling. Before diving in, however, it’s best to have an understanding of both the opportunities and the challenges of niche marketing.
Are you ready to capitalize on your strengths as an entrepreneur in a niche market? Read on.
- Live your dream. Not all of us are cut out to be multimillionaires or world powers, but that doesn’t mean that we have to settle for boring 40-hour jobs. Niche marketing taps into passion—our passion and the passion of like-minded customers.
- Set the trend. Have you spotted an underserved niche? You have a tremendous competitive advantage! By developing products that meet the needs of the niche and by marketing those products efficiently, you have an opportunity to dominate the market. The more unique your niche, the greater the likelihood that major players will shy away from competing with you.
- Scale down. Don’t have the space to raise a thousand hogs? Don’t have the workforce to crank out a thousand handmade chairs? Niche marketing means that you don’t have to mass produce. With the world being the marketplace these days, you will actually find running your own niche business much easier if you focus on a particular customer base that you can serve well instead of trying to compete on the global scene.
- Offer quality. Many of us sleep better at night if we know that we have pursued quality in our endeavors. Niche markets tend to reward that pursuit.
- Set your price. Yes, if you are unrealistic when setting prices, you will do yourself out of a job. That said, when niche marketing, you do have some control over prices. You do not have to be at the mercy of the corporate world, but can consider both margin and customer expectations.
- Put the dollars where they matter. It can take a big budget to compete in the global marketplace. You probably don’t have the money to advertise your home poultry flock enough to compete with Tyson. You may not be able to advertise a new formula of soft soap that can steal the market from the leading brand, either. By focusing on a niche, however, you can set a budget that reflects the size and purchasing power of a specific group of people and reach them more effectively.
- Connect with customers. Businesses thrive when they put their customers first. While large companies can serve customers, niche businesses have a unique advantage in this area. You probably already have a feel for what your customers need; therefore, you can probably meet that need and give them the tailored service that they are looking for. This in turn results in loyalty to your brand.
- Learn as you go. How well do you know your market and your products? To succeed at niche marketing, you’d better be prepared to become an expert in your field. You will have to stay abreast of information concerning all aspects of producing and marketing your chosen products.
- Research the market. Maybe there’s a reason that the niche you are looking at has not been filled. To take an extreme example for the sake of illustration, there’s a reason farmers’ market participants in Kansas don’t offer homegrown bananas. Producing bananas in Kansas is simply not practical. As another example, there’s a reason that you aren’t likely to find a high-end restaurant catering to a low-income neighborhood. The locals probably are not going to eat at the restaurant because they can’t afford to.
- Start small. A niche is small by definition. By finding a niche, you are accepting the fact that your product simply does not fit all potential buyers. It may never become a staple at the grocery story. By scaling up too fast, you run the risk of losing your hard-earned customer base. Also, do your market research in advance. Be sure that your niche is not too small to support your business.
- Count the cost. Developing a niche market takes time, effort, and money. Count the cost before you make the jump. And be cautious about taking on debt—heavy liabilities have been the undoing of too many startups. Recognize the fact that it will be a while before you start to see a profit. While your margin may be better than a mass-marketing company’s margin, you will still get a slower start because you won’t be making nearly as many sales, especially at the beginning.
- Pay the price. Big companies can get discounts on supplies and shipping because of the volume they work with. A niche business works on a much smaller scale, usually making its production costs per product higher.
- Work, work, work. Face it—niche marketing is a lot of work. You will have a hard time tapping into preexisting marketing structures (unless it’s Amazon) because you stand out from the crowd. Mass marketers look for products that fit the box. Therefore, you will have to handle your own promotion and distribution for the most part. This takes time and effort.
Niche marketing is an outstanding way for a startup to gain a foothold in a global economy. However, it requires focus, knowledge, and close attention to the bottom line.
A niche business is not a big business, and it cannot be run in the same way. Capitalize on your strengths—but do your research.