How To Research & Choose a Profitable Niche Market
Researching a market is a critical step that most entrepreneurs seem to give very little thought to, or often skip altogether. That’s a real shame, considering a little market research can save one a lot of time, money, and frustration, and might even save your business.
Identifying the target market is not an easy task. It is indeed one of the vital elements which inform you about the market you want to target and how it can bring the maximum benefits to you and your consumers and prospects.
In other words, it will become easy for you to look after your customer’s needs and wants in a much improved way only if they all are grouped according to their tastes and desires. There are different types of market that can be targeted.
They are discussed below.
This type of market consists of your key customers that have the identical needs and wants. Although you have not fully described their needs, you still are in a better position as you are aware of who is your target market.
It can be on a larger scale or smaller scale. However, more than the size is their needs which will play a decisive role in the end.
This is the market that is linked to your target market; however it is not the segment that earns you the majority of the revenue. For instance, a company who makes roof, their primary target market consists of commercial buyers who replace roof.
In addition, the same company also has the secondary market that contains residential segments that repairs roof. Although the majority of the income is extracted from the primary segment, nevertheless the secondary market does make a handy contribution to the roof company.
This kind of market consist your would-be or potential customers that have a different need not satisfied by any company. It is not an easy task to identify your niche market.
However, when it is discovered, it is certain that you will earn a lot of revenue from this market. For instance, a graphic designer whose main job is to design artwork for the billboard hoardings would benefit a great deal if he finds a niche of designing an EBook covers.
By incorporating the date of your customers, it will be easy for you to further define the following markets.
Main Target Market
Incorporating the customer information in your main target market will give you the confirmation of the identical needs and wants of the customers in this group.
There will always be a secondary market for your product even if you have not identified or defined properly. However, if it has been identified, it is always better not to pursue the target market and secondary market at the same time.
It results in the expansion of your marketing activities into the wide areas that may become difficult to monitor and may also result into heavy losses for your product and eventually the company’s image may go into jeopardy as well.
As discussed with the secondary market, never focus too heavily on the niche market in the early days of the product launch. However, keep your business updated on the developing niche markets that may prove profitable at a later stage.
Niche is a term that has been used by the majority of the businesses in recent years. Let us discuss its actual meaning.
is not a product of mainstream.
a product that is not easily available in the regular shops of the society.
a product that incorporates an important application and interest to a particular segment of the society which creates a desire for purchase for that particular segment only.
a product that is assured of dependability and forecasted selling power due to its specialist attraction to that segment.
It may appear odd to many people but its reality that when discusses and make strategies to find niche products, they are actually promoting a strategy of “playing safe” or “follow the crowd strategy.
For instance, your business decides to aim a promising established product category, but for selling purpose, you choose a specific narrow band of products.
In addition, you procure its raw material from the same supplier as your rivals, but you make innovative changes while marketing this product to your niche that earns you success.
The other method of identifying “niche products” is by getting ahead of your competitors by discovering a specific demand that is unique and special in the society and is under-supplied.
As soon as the special demand is identified, you can start searching out the supplies that can cater to this demand. The supplies can be searched in ways not followed by the majority.
Identifying foreign markets or much localized markets that are ignorant of the regular products.
In-depth internet search to unearth suppliers who possesses promising products but ineffective marketing tools.
Exploring new products at various trade shows.
Making close relations with the manufactures to come up with innovative designs, features and functions for the niche products.
Furthermore, it is also observed that the product you are selling may not be a “niche”, but the market spot to which you are promoting.
In other words, you can shift from “niche product” strategy to “customer group niche” strategy that enables you to earn revenue from non-niche products.
For instance, markets that are renowned as enthusiasts markets will contain ultra-specialists products, but there is also a high probability to sell generic products to the same segment at a much higher price.
To be more specific, people who love fishing will normally buy fishing rods and lines, but they will also be paying attention to non-specialist items that may consist of drinks, flasks, bags, camping chairs, outdoor clothes etc.
In this way, you can save the customer’s time by placing the related products besides the specialist items which has a higher chance of consumers willing to pay higher prices. It will be convenient for the people as it provides the element of “one stop shopping” as exercised in huge supermarkets.
Hence, people with the enthusiast mindset, can be easily targeted with the non-specialist items at a slightly higher price and can earn you substantial profits.
Niche Product Ideas
“Your wealth is in the wealth of your knowledge. Transform your uncommon wisdom into uncommon wealth because nobody has your unique experience.
Turn your thinking process into your word processor. Then take your packaged information to the marketplace where your good ideas make the cash register ring.” -Uzo Onukwugha
The task of getting niche product ideas is difficult. However, there are some fresh product ideas that can provide you a stepping stone to move forward.
Hence, you should start by taking into consideration the obvious which is that every individual is confronted with problems. This is from where you can get your first product.
People are always engaged in one problem or the other in their lives. Solving their problems will be the successful objective of yours.
Hence, what you need to do is come up with the unique product ideas that can provide relief to their problems.
If the aforementioned task is demanding, then the next idea that you can think of is the latest trends that have taken center stage in the market place.
To update yourself with the latest trends, you can take the assistance from the internet, television, magazines and newspapers.
Once you become aware of the newest and hottest developments in the market place, you are in a better position to invent a product that is associated with the existing trend.
Moreover, another idea from which you can create a niche product or products is exploring the old product/s.
All you have to do is catch any old product, analyze its features and performances and to which segment it is targeted at, and identifies its weaknesses.
The next step would be to come up with the ways though which the old product can be improved, modified or enhanced.
Finally, give it a new brand name along with the novel features and promote it in the market.
Furthermore, there can be another idea whereby you create a niche for your product that is entirely different from the previous targeted market.
The development of this niche requires experience and a great knowledge of the different brands in the market.
When you have a separate niche for your product, it will automatically make it easy for you to differentiate your product from the regular products and would be highly valued in this new segment.
The other idea that can be capitalized is by adding related products to the existing product/s. For example, if you product is a mobile phone, you can add related items like blue-tooth, headphone and body covers to it.
With innovative packaging, you can experience in sales of your product.
Apart from the major ideas mentioned above, there are ideas that can be looked upon such as making renovation in a mature product by make changes in its design.
Moreover, you can engage yourself with the consumers in order to know their likes and dislikes and what new features they desire in a product. This will further give you ideas about your niche products.
Targeting with Niche Products
It is quite obvious that when a company has a product or service to offer, it is very unlikely that every consumer in the society would purchase that product or service.
In the domain of niche market, your entire marketing efforts are focused on a specific segment in the society. This is the segment that reflects promising demand for your product.
Hence, before targeting that particular segment of the society, it is always better to implement niche research which will assist you in exploring the different characteristics of your segment. With this knowledge at hand, you will find your product in strong selling position.
There are various things that need to be considered while analyzing the niche market. First and foremost is the identification of the important demographic variables that may include gender, age, income level, ethnic groups of the market. The next step is to focus on the 3 Ws which are outlined below:
Who you are marketing your product?
Where are they located?
Why are they considered “very likely” in purchasing your product?
As far as the advertising is concerned, the accumulated information on the market can give you the right direction and assistance in carving out the strategies for your niche products.
If the products are offered online, it demands thorough research on the keywords that will be used for the niche goods. It may include words as well as the phrases that will play a vital role in promoting your niche products.
Targeting will niche products would be beneficial in two ways. First, it will increase the revenue for the firm.
Secondly, it can give you the option of being selective in the advertising program you want to pursue. This becomes easy and achievable when you are aware of your target segment.
In addition, you can also make use of the affiliate marketing. With the support of the affiliates, it becomes easy to pull more users to the website. At the same time, the content on the website has to original and interesting for the users.
Apart from this, you can also implement the interactive approach whereby you use social networking sites such as LinkedIn, Facebook and Orkut.
These websites enables you to create associations which have the potential to convert into future customers.
Another important platform for the niche products is the various discussion forums on the internet which can provide you valuable information on the potential niches and the targeting strategies.
Once the niche market has been identified or the niche products have been developed, it is imperative to attract them with the medium of advertising.
In this way, they will become aware that you have the product that they are looking for.
On top of this, once there is healthy and strong interaction with the target market, they will know more about you and your niche product.
This will increase your customer base due to the exposure of your niche products in the market place and in the minds of the targeted niche.
Identifying Your Passion
“Our passions are the winds that propel our vessel. Our reason is the pilot that steers her. Without winds the vessel would not move and without a pilot she would be lost.”—Anonymous
Passion plays a vital role in the activities we are engaged in our daily lives.
The identification and development of a niche market is heavily related with your passion. It has been said by many people and experts that instead of finding a niche market with a sole reason to make money identify the niche that you are most passionate about.
This will automatically increase your chances of success in the long run.
There is a very strong logic behind this statement. When you are passionate for something in your life, it is obvious that you will give the maximum time, energy and cost to that particular thing.
The other daily activities would take the back stage in your life. Your entire focus and dedication would be on achieving the objective you are very passionate about.
The same is the case for the niche market. The passion would enable you to devote your maximum time, energy and cost in identifying and analyzing the important variables that will lead to the identification of a successful niche market.
Similarly, if you are searching niche on the internet, the passion would force you to make a significant website, generate substantial traffic of the users and make considerable revenue for your business.
In addition, when the passionate objective is accomplished, it gives you heaps of joy and happiness.
On the contrary, if you do not show interest in the topic you are studying, there is a rare chance that you will arrive at the desired conclusion.
In the case of online niche, you will be unwilling and unenthusiastic to the work on your website and will devote less than the required time in monitoring and maintaining the website.
If there is considerable passion, then the outcome will match your expectation.
One the most significant thing that you should take into consideration during the process of niche market is your preference and comfort in the subject.
It is pretty straight that a person who is an expert in websites for instance will be fully aware of the ins and outs of the niche market or any other topic he is engaged in.
It is the level of interest and commitment that increases the amount of creativity shown in the work. Once the interest is there, the task becomes simple and spontaneous to you.
On top of this, it avoids the hindrance of original and innovative ideas and thoughts. In addition, the task requires regular input and update from your side.
This is only possible if your interest and passion shows consistency in the work. In this way, you are in strong position to do the task effectively and efficiently.
Therefore, the most important that has been deciphered is the importance of passion behind any work you do in your life.
Choosing the Niche
The choice of a niche market is dependent on several important factors.
These factors are not given the desired consideration as they play an enormous role in building the success for the business.
Choosing the niche market, by many experts, is considered as a challenge for the business. Hence, there are no hard and fast rules that need to be followed for identifying the profitable niche market.
It takes a great deal of time, energy and cost in identifying a suitable niche market for the business. The fact of the matter is that instead of focusing on the customers who are keen to purchase the products, it is better if you concentrate whether there is a substantial demand for your product or not.
Many of the businesses are devoting their entire focus on the “golden nuggets” (highly demanded niches with modest competition). However, it should not be the sole focus for selecting a niche market.
There are some important guidelines that can make a positive contribution in choosing a niche market.
It implies the niche market to be huge enough in term of the people keen to buy products or services in the niche market. In addition, the profitable niche market should not contain strong competitive forces.
The presence of competitive rivals will eat out the major chunk of your profit share. Therefore, you need to ensure that the competition is very minimal to make the task easy for you.
The niche must be interesting to you
It is believed that apart from the niche being profitable, it has to be interesting to you in order to sustain it for longer period of time. The niche requires your perseverance and motivation for it to be converted into a profitable niche for the future.
If the interest is there, your task automatically reflects your passion in variety of ways. On the contrary, if the niche is purely identified on the profitable basis, it will not take long for the rivals to creep in and take away your share of the profit.
Hence, your dedication and commitment has to be there all the time to keep your niche safe and profitable for longer term.
The niche must have a longer life
While doing the in depth analysis for the niche market, you will observe varieties of niches that are considered to be “golden nuggets”.
These types of niche markets have the potential to attract many businesses.
However, it also needs to be kept in mind for how long will they be attractive?
The time span of the niche market is very important. For example, if you select the football world come event as your niche market, this niche market will only last for few days.
The popularity of this niche market will soon be the thing of the past. Hence, you need to make sure that the niche that has been chosen should have the higher growth rate.
Thus, the choosing of niche is art as well as science and it takes a considerable amount of experience from the business to correctly analyze it the niche’s true potential.
Analyzing your Niche Potential
Analyzing the niche potential is very important for the business. The tasks involved in analyzing it are very demanding and challenging.
If the intention of targeting a niche market is derived from a hobby, then it does considered to be a significant matter.
On the contrary, if it has a business purpose attached to it, then it is incumbent on you not to repeat the mistakes other businesses have done and eventually became disgruntled and discouraged to carry it on.
To avoid this scenario, it is advisable to follow certain guidelines that can assist you in analyzing the niche potential.
It is obvious that any product you want to sell in the market has to be appealing to the general public.
To gauge its true potential, the easy and most economical way is to search its attractiveness on the internet.
Make a list of three to five niche ideas and type them in the search box of Google Trends, Amazin.com or Adwords. The graph will appear that will reflect from the most popular ideas to the least popular ones.
This is just the first step of your process. The next step is to visit the Google Adwords webpage and type in your niche idea in its search box. There, you will come across the paid sponsored listings at the top and the bottom of the page.
Through this you will know which niche ideas are being financed by the people giving you more insight on the niche potential. Last but not least, type the niche idea in to the search box of Amazon.com.
Here, you will locate books on your niche market and niche products, if any, to give a more refined conclusion on your niche decision.
The next method to determine the niche potential is by matching it with the fad likeliness. This is the issue that is rarely touched by the businesses.
It has a major bearing on the outcome of your decision. It wants you to be vigilant and guarded, irrespective of the amount of consumers purchasing your product, that the niche you are targeting is not a fad.
For example, in the business of vitamins and supplements, this retail business has witnessed the introduction of supplements such as bee pollen, shark cartilage, deer antler velvet and others in every quarter of the year.
However, their appeal and attraction never lasted long and they were not considered as popular as Vitamin E and related supplements. Hence, you need to be aware that the niche you are pursuing does not fall in the fad domain.
Last but certainly not the least is the competition method. There are two thoughts on this method. One group of people believes that the niche identified is not targeted by any business.
In other words, there has to be zero competition which is very unlikely in today’s world. The other group of people is of the opinion that the niche market has to be competitive as it will provide you with substantial profit compared to niche market with zero competition.
Hence, the competition map has to be studied well in order to have a conclusive outcome on the niche potential.
Profit Potential for Your Niche
There are multiple businesses in the market that have managed to discover promising market for their products or services that will tackle the existing problems.
However, they have been restricted in their stride by thinking what if they invest huge amount of time, energy and cost in to this segment and the outcome results in failure?
This is a very important consideration for the business. It demands a process which is skipped majority of the time. It is the process of validating your niche market in its entirety.
This is a crucial step in the identification of the profit potential for your niche market. Although there is no hard and fast rule that can guarantee you success, nevertheless, there are certain steps that can be followed in order to give your business a promising chance.
These steps are briefly mentioned below.
Is there a demand for your product or service?
This involves the calculation of the total number of potential customers that will be purchasing your product. Are the customers in the segment have overcome the problem or still suffering from it?
This gives an idea of the amount of people interested in the niche product. a lot of surveys have been conducted on various products and people’s taste and preferences.
You can take the assistance from these surveys in order to analyze your niche’s profit potential. Secondly, the internet has become one of the most economical commodities in the modern world.
It contains vast amount of information on variety of issues and subjects out of which majority of them can be accessed freely. Hence, typing your niche product keyword in the search box of popular search engines, you can get a fair amount of idea of how much profit can be earned for your niche product.
Furthermore, if the niche product is an online product and you are promoting on your blog or website, you can check out whether it involves the adequate advertiser’s base in key PPC (Pay per Click) Advertising networks.
It is known that Yahoo Publishers Network (YPN) and Google AdSense are the two most popular PPC programs on the internet.
Thus, you can make use of the above programs to track down the amount of traffic and average CPC for your important keywords for AdWords/AdSense.
Is there any competitor that is already targeting your niche segment?
It is very important for your business to know in advance the products that have been sold by your rivals. If you come across the competitors that are already selling your niche product, it is advisable to analyze their business and products more deeply rather than switching your niche product.
This strategy involves the SWOT analysis of their product in order to identify the elements that you can improve, enhance or modify. This move will put you ahead of your rivals and would give a solid reason to the customers to switch to your niche product.
Does you niche product has a high lifetime value?
The term lifetime value implies the sum of the value of each consumer to your product as they are perceived to buy from you on a regular basis.
The questions that you need to ask yourself are the following:
- Is it easy for you to transform one-time buyer into regular buyer?
- Will there be related products beside your main niche product for your customers to build long-lasting and valuable relationship with them?
The fact of the matter is if you are selling out one product, it is not at all inappropriate to come up with other related products as it is much easy to sell to regular buyer than finding a new one.
Analyzing the Competition in Niche Market
The level and amount of competition is the deciding factor between the success and loss factor of the niche market. As the niche market is small in nature, it contains one or two products.
However, if the scenario is demanding where you end up more than two niche products; it is very likely that your niche market may become saturated sooner rather than later.
Taking into account the size of the niche market, it is advisable to determine your comfort level in order to assist you in confronting the competitors at hand.
It is believed by many experts that if you are passionate to be a salesperson, then the task of dealing with the competitors become easy and you start enjoying the competition.
If it is the other way around, it is better to switch your business to some other niche market.
The 20th century has witnessed some incredible niche builders where they made their way through tough competition.
For instance, in 1920s, the Walt Disney Company laid the foundations of its huge empire on the unknown art of child-like sketches which later came to be known as cartoons.
The business was surrounded by hard-hitting competition environment that included the Great Depression, the Wall Street Crash and World War 2.
It was beyond the expectations of the experts that the business of cartoons, being considered as silly, would overcome some of the toughest crises in the world’s history.
Hence, it is advisable to spend a great deal of time in studying and analyzing the competitors both on the grounds and online. You can start by the most basics questions that are outlined below.
What types of products are they selling
What range of prices have they adopted for their niche products?
What are their major and minor strengths and weaknesses?
In what ways can your business compete with rivals?
In the case of your business, you can ask the following questions.
Is the product or service you are selling is new and right for now?
Have you refined the market down to a potential niche that you can cater to and something that is relevant to 2010?
Although, there is no hard and fast rule, a good rule of thumb states that rather than competing with your rivals on the same strategy, implement a different and fresh angle that the competitors are either lacking or you believe you can capitalize on it much better.
In this way, you have the better chance to outclass your competitors.
Last but not the least, try to use personal branding.
In the world of today, overcoming the strong competition (that encircles direct and indirect, local and foreign and online and offline competitors) involves making a close and personal relation with your targeted or niche customers.
In other words, you have to “own” your product or service in a quite distinguished manner compared to the sterile environment of yesteryear.
The combination of the above-mentioned strategies will lead your business to success in the long term. Whether you have an existing business you want to bring online, an online business that could perform better, or you’re starting out and want to build your own new business online – you are in the right place. Simon founded the Internet Business School after finding out himself just how much there was to learn about doing business online and how widespread the information is. Go here now!