What is Niche Marketing? How to Develop a Niche Marketing Strategy?
Have you ever thought that being a friend of everyone is so hard?
You need to be there for everyone, share everything with everyone, and be invested in everyone’s life - it can be messy and exhausting.
When it comes to your business, there is not much difference. It is challenging for you to please a large group of audiences and make them satisfied all the time.
But there is a solution: You can focus on satisfying a specific group of customers who are likely to remain your loyal consumers and take your brand to the top.
And that’s what we call niche marketing!
So, in this article, we’ll guide you through everything you need to know about niche marketing, including the definition, advantages and disadvantages, 6 steps to develop your niche marketing strategy, and 4 common mistakes of niche marketing you should avoid.
Let’s dive right into it!
Table of contents
- What is niche marketing?
- Advantages and disadvantages of niche marketing
- 6 steps to develop your niche marketing strategy
- 3 common mistakes of niche marketing to avoid
- The bottom line
Niche Marketing Definition
Instead of marketing to everyone who can benefit from a product or service, niche marketing is a marketing strategy that focuses on a unique target market. Customers in a niche market have specific preferences, so marketers need to understand their needs and deliver a better solution to their pain points.
A niche market does not necessarily mean a small market, but it involves specific target customers with a specialized offering. Brands usually separate every market into subsections according to some criteria like:
- Geographic location
- Demographic base (age, gender, educational level, and income level)
- Psychographic data (attitudes, interests, and values)
- Price (wholesale, discount, high)
- Product/ Service quality (premium, high, moderate, low)
By identifying that, companies can become a market leader and stand out from the competition. Today, niche marketing becomes much easier to approach with tools like Facebook ad targeting and other social media monitoring.
Take Lefty’s San Francisco as a typical example. Located in San Francisco, Lefty’s is a retail store that sells school stationeries, kitchen supplies, gardening tools, and more for left-handers. Only 10% of the population is left-handed, allowing Lefty to run its natural niche marketing strategies.
And this brand gets niche marketing right by investing in PPC ads for search terms that lefties are likely searching, for example, “left-handed scissors” or “left-handed kitchen sets.” Some small businesses often ignore PPC advertising, as they think they can’t compete with big companies. However, Lefty’s San Francisco proves it right to pour money into a niche market, using PPC advertising.
Advantages and disadvantages of niche marketing
Many companies are making their own way by following a specific niche market and creating a competitive edge. Nevertheless, niche marketing does not hold a bright side only; it contains some limitations as well. By defining its pros and cons, entrepreneurs can know how to drive their business in the right direction.
First and foremost, with niche marketing strategies, companies can:
- Have less competition. Unlike in generalized marketing, where market competition is so fierce, niche marketing has quite less competition for viable customers buying products or services. A niche is a part of your USP (Unique Selling Point) and a way to differentiate yourself in the marketplace.
- Gain market expertise. Think about it: If you have had several years selling a unique product or service while no other businesses can, customers can easily consider you as an industry leader or expert in your niche. The more you dig deep into your niche, the more market expertise you can gain.
- Build brand loyalty. As you might be the first one to offer a specific product or service or the only one that is marketing in a niche market, customers will come to find you. It is a huge opportunity for you to develop intimate and valuable relationships with your customers and turn them into repeat buyers, which eventually builds a sense of brand loyalty among them.
- Spend less on marketing. Instead of spending a large amount of money on approaching large groups of people, you only need to market in necessary areas where your niche customers will appear. Besides, with available tools for refined targeting options and social media management, you can learn about your audiences quickly and economically.
On the flip side, niche marketing can lead to some disadvantages, such as:
- Limited growth. By definition, your niche market is going to be smaller and more specific. That means the niche market is not likely to grow enough for your business and products to see an exponential increase in profit margin and sale. Depending on how specific a niche business is, it can be tough to reach out to new audiences, which ultimately affects how you grow.
- More competitive if successful. While it is true that less competition will happen in a niche market, if your business achieves tremendous success, many other businesses are ready to jump in the game. Then, you may end up having to fight more for customers.
When it comes to niche marketing, there are still some existing limitations that need consideration. But we believe its advantages outweigh the disadvantages, and if possible, you should give it a try to see how effectively it can work for your business.
But how can you develop your niche marketing strategy that will bring back a lot of audiences and money? Read on our next section to explore the 6-step guide.
6 Steps to develop your niche marketing strategy
Step 1. Know yourself
Start your strategy by considering what you are good at and what you can offer. The most effective niche marketing strategy circles around your brand’s unique strengths and perspectives. So, reflect on your strengths and weaknesses, uniqueness, competitive advantages, distinctive competences, and other characteristics.
Also, think about the areas that you enjoy working in and the types of people you like working with. You should answer the following questions to know more about yourself.
- What products and services that you offer?
- In which areas do you especially excel?
- What characteristics can you show better than your competitors?
- Who do you and your business team like to serve?
- How can you solve your customers’ pain points?
Knowing yourself is a basic step before you move to the next levels. It requires business owners or planners to have a realistic and practical view of the actual situation of the company.
Step 2. Know your customers
Unlike mass marketing techniques, we cannot make assumptions about specific customer groups. To be able to focus on a unique niche or target customers, you need exact information.
The challenge now is to identify the age group, geographic region, the needs the product or service will cater to, their social status, and related parameters. Besides, there is a well-known business paradigm for success - identify a need and fill it.
Customers come to your niche market only when they have special needs and interests. Your task is to find out and serve those things. For example, in the case of Lefty’s San Francisco in our first section, they know that left-handers may find it difficult and inconvenient when using the same products as right-handed people. So, they offer useful products to serve those special needs.
There are a variety of methods for you to identify the needs of customers, such as market research, surveys, questionnaires, social media channels. Many research houses are publishing market surveys on niche markets, and it could be a good starting point to identify your target consumers. Sometimes, the best method would be to listen and talk directly with customers.
Step 3. Know your competitors
Although the competition in niche marketing may not be so stiff, you cannot ultimately make sure that customers will choose you instead of your competitors. When determining niche markets, keep in mind to consider other niche players. Social media platforms can be an ideal place for you to know more about your rivals, as well as get to know their latest marketing tactics, product offerings, and pricing plan.
Moreover, you should find out why consumers do not use your products and services but use competitors’ goods, and how you can persuade them to purchase from you. This might be accomplished through repositioning your offering or through other means.
Step 4. Spread the word about your business
Niche marketing requires an entirely new approach to how you spread the word about what products or services you are offering. To do that, you should assess the strengths of any marketing channel that relates to your business.
For instance, social media platforms have proven itself to be lucrative for small businesses in niche markets. However, the increasing costs of advertising on Twitter and Facebook can cause an economic burden on enterprises. If this is the case, paid search or traditional marketing channels might become more viable solutions.
Whatever your solution is, you should create attractive content to attract them and make them want to read, share, and buy. Remember that content marketing is a vital element for engaging customers and persuading them to buy. Can you speak their language and tell them how excellent your products and services are?
Besides, it will help a lot if you calculate a little bit and scrutinize the return on investment (ROI) of any niche marketing strategy to make sure that you’re cost-effectively reaching your target market.
Step 5. Don’t ignore the power of testing
In the words of David Ogilvy, “Father of Marketing,” test, test, and test. Like many marketing strategies, you can’t just establish a niche marketing campaign and hope it will achieve the results you want. You must test your initial idea, review the outcomes, and keep on adjusting accordingly.
This step is more critical when you’re dealing with niche marketing because one size doesn’t fit all. You need to be sure that your brand message is resonating with your target market.
Before going ahead with the full production of the product or launch of a service, many companies often introduce a testing product or service in selected markets, gauge attention and feedback from audiences. In many cases, they offer free samples to customers or take part in trade events to promote face-to-face conversation and boost sales.
Once the feedback from niche customers is received, it’s time to evaluate and make any necessary changes.
Step 6. Track your results
Once your testing procedure is done, the next stage is the actual introduction of the product or service in the market. However, it is not the end. An essential step, after all, is tracking and measuring your results.
As with any marketing, you must match your results back to your goals, and see how much percent you’ve achieved. By identifying this, you can know how good or bad your niche marketing strategy is working and what areas need your improvements.
3 common mistakes of niche marketing to avoid
Now that we know how to develop a niche marketing strategy, it’s time to look at some common mistakes, which make many businesses lose a huge amount of money and even fail. To help you avoid this, we’ve analyzed and listed the 3 common mistakes together with comprehensive solutions.
1. Selecting a niche based on products instead of problems
Remember this, a product is not a niche, and a site that is built around specific products is not a niche site.
Even if it makes you a few hundred dollars, it is not likely to last for long because sooner or later, the product or service will become outdated and people will move on. However, what doesn’t change is the actual need behind those products.
So, the point is you should find a problem or need that people desperately want a solution for. Then, create a site around that problem-solving content, and promote products that can solve that problem.
For instance, you want to create a site that makes almost all of its money by promoting various digital cameras and photography equipment. Instead of just trying to hard-sell products by talking about features, you can provide relevant articles to help people become better photographers. This will receive more attention from millions of hobbyists and even common folks who own a smartphone or a digital camera.
Focusing on a specific problem, instead of a product or service, will give you more room to generate useful and problem-solving content, as well as find ideas from different angles.
2. Not fully understanding the earning potential of a niche
“I don’t want to gain profits from my niche products,” said no entrepreneurs. Undoubtedly, it is crucial to evaluate the earning potential and available money-making opportunities in a niche before fully committing to it.
If there are not enough ways to make money in your niche, even thousands of visitors will mean nothing to you. So, before you penetrate a niche, do a bit of research on its earning potential. Here are some things you can implement.
- Search Google for keywords related to your niche and see if there are any ads (paid search results) on the list.
- Search Google for other sites in that niche and see how they’re getting traffic and comments on their content.
- Head over some online marketplaces (eg., Amazon) to see relevant products with lots of reviews. That’s usually a pretty good indicator of earning potential in a niche.
3. Not having a step-by-step plan for growing your business
How far ahead do you think when selecting a niche for yourself? 6 months? 2 years? 10 years?
If you’re like most newbies, chances are you don’t think much about your future at all. Your niche selection may be mostly based on impulsive decisions triggered by the success story of some bloggers, motivational speakers, or even a gut feeling that you’ll make money in this niche. However, failing to plan means planning to fail.
Hence, when it comes to the growth plan of your niche business, there are many things to consider, including:
- Is this a seasonal or evergreen niche?
- Can you come with a quarterly, bi-yearly, or yearly content plan for your niche business?
- Is there enough room and interest in this niche to grow?
- Where does your traffic mainly come from, and how do you plan to grow them?
- Can you build a community relevant to your site? Is it a niche where people enjoy discussing things with others?
- How long do you see yourself investing in this niche?
We know it’s unreasonable to expect a complete newbie to have a perfect plan for a growing niche business. However, you need to think ahead while selecting a niche if you don’t want to waste your time and resources.
The bottom line
So, we’ve been through a complete guide of niche marketing. In this guide, we’ve introduced to you the definition, pros, and cons of niche marketing. Besides, we’ve also given a 6-step plan to help you develop your niche marketing strategy, as well as 3 common mistakes you should avoid when defining a niche.
Niche marketing is an exciting topic that gains a lot of attention in the business world. Do you have any other recommendations to niche-ify your market? Please share them in the comment section below.
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