Sometimes companies need to think small in order to grow. Niche markets represent an activity in business wherein companies cater their efforts toward highly specific consumer groups, instead of a wider section of the public. Although soliciting fewer customers may sound contradictory, niche marketing offers substantial opportunities for success.
Defining Niche Marketing
Many successful companies provide a breadth of goods and services for an array of people. However, gaps in customer needs often remain. Niche markets are subsets of a consumer audience, such as eco-conscious new parents, individuals with incredibly high incomes, or people who own exotic pets. Companies that work in niche markets are often highly specialized, and gain profit by becoming experts in their field.
Benefits of Niche Marketing
Choosing to work in a niche market provides a host of benefits, ThriveHive explains. Niche marketing can:
- Enhance customer relationships. When businesses cater to a smaller customer base, they can spend more time on the quality of their interactions. This reinforces customer loyalty.
- Reduce competition. Niche market companies can be assured that few other businesses do what they do. Instead of monitoring competitors, these companies can focus on making better products and services.
- Increase visibility. Because niche markets offer something unique, this gives them the propensity to stand out. Media outlets tend to notice.
- Offer better word-of-mouth marketing. Customers with specific shopping requirements are often in contact with other individuals who share those needs.
- Preserve resources. A small customer base means companies spend less time and effort on data and analytics to understand their market.
Niche Marketing Considerations
When venturing into a niche market, Inc. explains that companies should consider two essential topics: targeting their markets, and achieving profitability.
Targeting the Market
Targeting the market simply means finding the right niche. To do so, business leaders can ask themselves the following:
- Who is our current customer base? Potential customer base? What do they buy? Which customers offer the most reliable business and profit opportunities?
- What needs of our current customer base are not being fulfilled? Does our intended product fulfill that need?
- Who is our competition? Who are their customers?
In addition, business leaders must consider the demographics and psychographics of potential consumers. This means finding out not only who their customers are, but how they think. Considerations might include:
Achieving Profitability in Niche Marketing
To make money at a niche business, Inc. suggests the following:
- Categorize customers. Which current customers have unreliable purchasing patterns? Leaders should weed them out of marketing plans. Which customers are top buyers? Significant buyers? These should be tiered. Understanding who will bring the most profit to a business can help make any company’s transition to a niche market a successful one.
- Prepare for changes. Business owners starting niche companies need to think about how they will handle the cyclical nature of customer demands. Similarly, if an established business is transitioning to a niche market, company leaders must understand what kind of customer turnover they might experience.
- Plan for the worst. Company owners should take time on an annual basis to think about worst-case scenarios. They need to think about circumstances that might put their company out of business, and be prepared to address them.
- Ready the workforce. Any employee of a niche company should have the skills required to help that company stay competitive. Company leaders need to be prepared to train their workers, and also outsource tasks if necessary.
Niche Marketing Examples
Niche markets can cater to a seemingly infinite number of consumer needs. Examples might be:
- An office supply company that exclusively sells items for left-handed people
- A clothing store that specializes in garments for tall women
- A grocery store chain that carries only organic products
- A physical therapist who specializes in helping stroke victims with paralysis issues
Individuals who aim to start companies like these can build the skills they need for success with the right degree.
Embracing Innovation in Business
Niche marketing represents an exciting and gainful area of business. At Virginia Wesleyan University, the online B.A. in Business provides students with a relevant curriculum that prepares them to excel as leading business professionals. Designed to be completed in as little as one year, the program offers students a fast track to a world-changing career.