It's a common misconception that if you're not casting a wide net with your marketing, you're leaving money on the table. Actually, the opposite is true. It's more expensive and usually less profitable to sell a range of products to a wide audience. Furthermore, if your product or service is too similar to a competitor's, price will always be an issue. When price is your only point of comparison, it's tough to build a successful brand. Targeting a niche market is a great way to avoid these issues and make your company stand out. But how do you find the right niche?
First, a broad category, like small-business owners, doesn't constitute a niche. A niche is a much more narrowly defined group of prospects. When finding yours, make sure it meets the following criteria:
1. Its members have similar needs unique to the market segment. You should be able to pinpoint common-denominator needs that differ from the needs of the rest of the market. Of course, these needs must also relate to your offering and industry. For example, attorneys may have unique needs when it comes to document copying, so if you provide copying services, it makes sense to target attorneys specifically.
Geography also plays a role. Market segments can vary dramatically among local, national and global markets, even within the same industry.
2. Your product or service meets these needs better than competing products. Your offering must be more attractive to your niche customers than other products in your industry. Offer compelling reasons to buy your brand that speak directly to special needs. These reasons don't need to be intrinsic to your product's features, they can also extend to aspects of your business like customer service.
3. You can market to these prospects economically. To attain a decent ROI on a modest budget, it must be relatively easy to identify and reach your niche audience. Direct mail is a common method of advertising, but your mailing list can make or break you. Find ways to first narrow your list to qualified prospects, then write your message directly to them.
4. The group is large enough to generate the amount of revenue you need to remain profitable. Remember, your niche must provide you enough customers to stay in the black. If it doesn't make sense fiscally, it doesn't make sense period.
5. Members aren't currently being targeted, or they aren't being targeted as well as you can target them. The best niche is one in which the competition is ineffectual or nonexistent. Find the overlooked niche, not the obvious one.
Determining your niche means asking yourself questions like, who will most likely use my product or service? What makes my brand special or unique? And why are customers choosing my brand?
As markets mature and competition increases, the demand for specialized goods grows. The more you differentiate your brand, the less competition you'll have and the faster you'll build brand equity.