How to select a niche market
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A niche market strategy may help you focus your resources on obtaining clients for whom your product or service provides the best fit to achieve their goals, address their needs, or solve their problems.
1. What is a niche market?
A niche market is a subdivision of the market at which a specific product/service is aimed.
The niche market gives definition to the characteristics of the specific product/service that is aimed at meeting the specific needs of the market, as well as the price category, product/service qualities and the demography on which this should impact. This is also a small market segment.
2. How do I find a niche market?
One option is to make a list of your previous clients. Include details such as the name of the client, the name of the business, industry type, service and/or products purchased from you and the amount spent with you over a specific time period.
From this it should be possible to identify certain trends and patterns in order to identify specific client categories.
In your search for a niche market, you should be able to answer the following questions:
- When I speak to, or sell to……, it energizes me the most.
- Does the selected group of clients (the people who will benefit the most from my product/service) have a goal, need or problem that my product/service could meet/solve?
- Could I differentiate my product/service in order to unlock value for my client?
- Will the selected group of clients be willing to pay full price for my service/product?
When you start a new business it is more difficult to identify a niche market. Look at what your competitors are doing (their websites are good sources of information) and who their target market is. Then ask yourself if your product/service is better in terms of quality, could be provided at a lower price, or addresses a unique need that your competitors cannot equal.
Also think of homogeneous groups of people with whom your product/service will find favour, for example: engineers, parents, singles, anglers, tennis players and pensioners, to name but a few. The next time you are in CNA, or another bookshop, look at the variety of magazines and books available, each indicating a specific niche market.
Time and the availability of cash are and remain the scarcest resources of any smaller business. A niche market approach, if properly researched and duly implemented, has the potential to provide better results than an ‘everything for everyone’, random approach to market segmentation.
Article written by Jannie Rossouw, Head: Sanlam Business Market
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