The Best Markets aren’t the Biggest
It’s quite understandable for you to pick the largest possible market in which to sell your products. But if you’re a small business, the biggest markets aren’t necessarily the best.
The biggest markets may be the best known, but they are also the most exploited. In big markets you’ll find lots of competitors, more consumer resistance and lots of price competition.
If you’re not very careful your big market full of opportunities could become a wasteland for your business because no matter how much you try your battle with established competitors will be long and hard.
A Solution! – Niche Marketing
If you are a small business and you want to achieve rapid business growth the best strategy is to look for sales opportunities that you can convert better than your competitors. This is the main idea behind “Niche Marketing”
In this and a following article we’ll provide a five-step step plan for implementing a Niche Marketing Strategy.
Five Steps for Developing a Niche Marketing Strategy
The Five Steps of Niche Marketing are?
1. Divide your “large” market into smaller market segments
2. Identify business niche areas for your product within these segments
3. Research these niche areas and estimate their market potential
4. Build a profile of potential customers in these business niche areas
5. Develop a strong product proposition for these customers
In this article we’ll focus on steps 1 to 3.
1. Segment Your Market
Market segmentation has been around for a long time. You may even have already carried out some segmentation of your marketplace by deciding to focus your attention on a particular geographical area or socio-economic group (e.g. small businesses, young professionals, industry type etc.).
Now take your segmentation a stage further by looking at other ways in which you could divide up your marketplace. For example, a manufacturer of devices for petrol and diesel engines decided to segment its market into family automobiles, commercial vehicles and boats.
2. Identify Business Niche Areas
When you have a list of market segments bear in mind that even though you may think your product suitable for all the segments you’ve selected, in each segment they’ll be some groups of companies or individuals who will need and want your products and others that won’t.
These groups may be your first niche markets. For example, the manufacturer we talked about earlier decided that it would be better to focus on “family leisure boats” as a niche market rather than “high performance boats” because it had a lot of knowledge and experience of the types of engines used in leisure boats.
So, look for the business niche areas within each segment and find niches where you think your product will do well. Spend as much time on this as you can.
It’s not always easy to find niches in an existing market or to identify new winning niches in which to create a business. But fortunately there are a lot of online resources to help – local business directories, Internet directories, websites with information on trends and fashions. Also, large retail sites like Amazon and eBay provide information on market sectors and niches in which lots of their products and services are being sold.
In addition to using the Internet you may need to carry out some research on the telephone and in your local library, especially if your business is focused more on the local community rather than on the larger “global Internet” market.
3. Research Your Niche Areas
Once you have a list of niche markets in which you are reasonably confident you will need to estimate the size and business potential of each one. It’s easy to leave this step out, but if you do you could discover after spending a lot of money and doing a lot of work that you are trying to develop business in a niche which isn’t commercially viable.