It is uttered so often now, it is almost a cliche, it is critical that a business be focused on serving a particualr niche or perhaps a very manageable (small) number of niches to succeed. Try to cast a net too wide or address too broad of a marketplace, and the business will suffer from being too difuse and unable to meet any particular customer’s needs. In essence, being a jack of all trades, and a master of none.
Defining The Term
A niche is defined as an area of the market specializing in one type of product or service. Said another way, it is appealing to a subset of the entire marketplace through a targeted offering.
Why it is Helpful
Thinking in terms of a niche forces a discipline upon the company’s processes that serve to crystallize how that company’s products or services can be best positioned. Whether it is in reference to product features, marketing messages, sales efforts, or any other aspect of the companay’s offerings – it is helpful to think about how the targeted user or users will evaluate or assess the product/service.
Commonly, business owners will assume that the product or service can “sell itself” and will be easily recognized as providing value to the prospect without needing to be clearly articulated as to how to use the product/service, when to use it, how to assess it, etc. Unfortunately, the prospect is rarely as expert as the provider in understanding product features, competitive analysis, or being able to cost justify it. So, the effort to think about a particular niche (specific industry, job function, experience of prospect, etc.) within the market and tailor a message to that audience is helpful. Recognizing that not all audience segments will respond similarly to the same messages, product features, or uses of a product/service and choosing those aspects that will resonate most postively with the targeted niche can, and often do, serve the business well.
Focusing attention on the needs of the customer or prospect and not merely on the wants of the supplier is useful and helps focus the efforts and energies of the business to prevent missing important requirements or expectations. Frustrating a prospect by demanding that they figure out how a product/service can best be used to meet a need rarely leads to a positive outcome.
Why it is not Always Beneficial
On the other hand, if you narrow the target down to finitely, you run the risk of squeezing the potential buyers into niches that cannot sustain a business. For example, it might be too broad to try to market to a target of “Mothers.” Not all Mothers have the same needs or wants, there are Mothers of infants, teens, and adult children. There are Working Mothers, Single Mothers, Adoptive Mothers, etc. Trying to appeal to all of them with a single message will be difficult. The target may be too broad. On the other hand, if a target market was, “left-handed Mothers of children between the ages of 2 and 6, living in apartment buildings” it might be way too narrow to generate enough sales to be a worthwhile niche.
Finding a market target that shares enough commonalities or similarities to be large enough to create sufficient volume, while not being too large that the business cannot comprehensively address their needs with a single product or a marketing approach is as much as art as it is market research science. It should be carefully considered and not left to hunches or assumptions.
So, What to do?
To be sure that you are able to mine the riches of appealing to a niche, and avoid falling into the ditch of a niche that is too small, it is helpful to ask three simple questions:
- What problem does the prospect have that the product or service can address?
- Who within the prospect’s business is responsible for addressing this issue?
- What is the likelihood of that person buying?
Be aware that you may have multiple targets or niches, but each may (likely will) require different messages to attract or appeal to them. For more details, see StartUpBuilder website.