Your niche product or service is found somewhere between your customer needs and the gap in the market. Drilling down into your customer behaviour and understanding your competitors’ limitations provides businesses with the insight and foresight to dominate a small and specific area of their industry. We’ve all heard the phrase ‘niche until it hurts’, and we know that finding a niche to position for your business or product is not an easy task.
Niche marketing is a great way to dominate a specific segment within your industry and position yourself as the expert. It requires an intense strategic planning process which always pays off in time. Focusing on a smaller target audience is more cost-effective with a higher return on investment. Find out how you can develop your niche marketing strategy in this month’s District32 blog.
By focusing on a smaller target market, a business can design products, services and packages to address their audience’s needs with a higher chance of sales and conversion. A smaller and more focused audience will be more responsive to products and services specially designed for them. Niche marketing enables businesses to identify new market trends and have a higher profit margin as they can guarantee higher levels of customer satisfaction.
Identify the right market segment.
The 80/20 rule is a well-known phenomenon called the Pareto principle, which states that 80% of the results are due to 20% of the causes. For example, 80% of writing uses 20% of the words we know. We only wear 20% of our clothes 80% of the time. As for a business, 80% of sales comes from 20% of customers. Most companies have a dedicated base of super fan customers who hold the bottom line. These super fans are an underutilised asset that most businesses overlook. By defining and better understanding your high-value customers or super-fans, you can design a strategy to attract similar customers.
Segmentation done correctly involves dividing your existing customer base into five smaller groups with specific demography and psychography to understand why they are your loyal and profitable customers. As you divide your client base into smaller groups, similarities will start to appear in the groups. Parallels may include age, gender, life stage, similar experiences, social class, or even personality types. Effective segmentation based on similarities that your raving fans share, reveals what problems your product is solving for your top customers. Once a business understands its niche audience, it’s easier to develop new products and services that will appeal to this segment and add more value to these products to increase overall profit.
Look for the pain points.
Finding your specific target segment is only the start of your niche marketing strategy. You will need to understand how your product fills a void in your customer’s life. Customer research and analysis is the key to effective niche marketing. Once you know the needs and wants of your target segment, you can start developing solutions to help improve their situation. Let’s create a mind map for your ideal customer and understand their habits, challenges, and needs in a specific area of life, work or relationships. Uber is a perfect example of a brand capitalising on pain points. Uber saw a gap in the market, where customers had to wait a long time for taxis – there was a lack of flexible transportation services on offer, which left customers frustrated and helpless. Uber addressed the critical problems faced by the customer and reversed the power structure. Suddenly the power shifted to the customer, and Uber decentralised the taxi industry giving flexible ride options through the flexibility of drivers. Genius, some may say. However, all that Uber did was offer a simple solution to a complicated problem through a mobile app.
Niching is predominantly about solving a problem your customers face making qualitative research and analysis of behavioural data crucial. Most businesses hate it when their customer complains about their products and services. These complaints, when analysed properly, can be the catalysts of innovation and domination in a market segment. Ask yourself what the most annoying part of the customer journey is? How can you improve your product to make it more efficient? What combinations can you add to the offer to make it irresistible to your customers? What do your customers dream about? The questions you ask about your customer’s experience hold the key to finding a niche in the market.
Zig when everyone zags!
The market dictates desirable products or services most of the time. This is why most products or services remain similar, and consumers find it hard to choose between them. Going against the norm is always a great way to differentiate your business from your competitors. Every category has its own niche differentiator. For example, the flour aisle has a niche gluten-free section, increasing its market share considerably in the past ten years.
Another example is Tesla that saw a massive opportunity in electric cars and invested heavily in owning this small market share by being a pioneer. More and more now, we see niche start-ups created purely on the identification of a niche opportunity. These start-ups are highly aggressive in their marketing approach and grow their market share fast by addressing key issues and demands of specific market segments. Hopin saw some limitations with Zoom and Google Meet and wanted to create an app where audiences could interact freely with one another, just like in a live event. In 2020, the company started, and it now has a market valuation of $5.65 billion because of a gap in the events management industry. Niche marketing, when done right at the right time, is a profit accelerator for the business. Niche products always attract higher prices than other products because the investment put into research and strategy in the planning stages of product development creates more value in the customer’s eyes. A niche product eventually becomes a trend; this is why most major brands are always racing each other to find new niche markets in their industry. Don’t miss a great opportunity to skyrocket your business, find a niche and capitalise on it as quickly as you can!