How Small Business Thrives Through Niche Marketing
We’ve all heard the question, “Would you rather be a big frog in a little pond, or a little frog in a big pond?” Everyone always picks the big frog. But this is a trick question! It is not the size of the frog that matters but the size of the pond. Unless your company is one of the multi-million dollar leaders in your industry, you are, like most everyone else, a small business. We are all little frogs! But we can appear to be bigger and can enjoy many of the advantages of being a big frog if we are careful in choosing our ponds.
The goal of niche marketing is to pick a pond small enough to dominate and large enough to be profitable. When you dominate a niche, you are the recognized expert and authority in your field; you’re the go-to person when someone has a particular need.
What is a market niche? Look at television. Twenty years ago the three major TV networks offered a variety of programs directed to Middle American families. Today, there are scores of cable stations based niche programming directed to people with specific interests- the Food Network, History Channel, Fine Living, Animal Channel and Travel, to name just a few. They are fulfilling a specific need for information and entertainment.
Niche marketing is limited to the media. It can be used in any industry and is one of the strongest positions to take, particularly for a small business. Niche marketing has three major advantages: less competition, higher profits and easier marketing.
In niche marketing you want to be the biggest player or the only player in your specific segment of the market. In other words, you want to sidestep competition. When there is less competition, you will be more visible to your clients and you will be perceived as the expert.
Less competition also means that pricing should not be an issue. In fact, goods or services in a niche market are often priced higher than comparable goods or services in the open market because they have been positioned as a specialized product or service.
Lastly, it’s easier to market to a niche. By its nature, a niche market attracts only specific buyers who all have a common interest or need. Specific media and the internet make finding these buyers easier than ever before. As a result, your advertising/marketing dollars are more cost-effective because you are using a rifle rather than a shotgun.
If you want enjoy these advantages there are three basic ways you can pick your pond- or develop a stronger niche presence for your company- through an industry, through the clients or through the products.
See what areas are already dominated by the big players in your industry and then find the holes. Years ago, I had a friend who was left-handed and through our association I learned some of the challenges left-handed people have. For example, the typical pair of scissors is molded for right-hand use. Likewise, the hand can opener is hard for lefties. The computer mouse with its right and left click buttons has to be used backwards by left-handers. And then, there’s bowling balls, golf clubs and baseball mitts, etc. The point is that at one time left handed people had specific needs that were not addressed.
Are there niches available on the fringes of your industry? Of course, there are. For example, some accountants may work in the entertainment industry but how many of them are specializing in the sub-industries like production companies, film editing, music studios, etc. Each of these businesses can have special situations such as royalty payments and if an accountant had specialized knowledge or experience it would be perceived as valuable by the clients.
Another way to develop a strong market niche is to pick specific types of clients. For starters, develop a profile of the clients you currently have. Are they mostly individuals or companies? What size or income level? Where are they located? How did you find them? What industry are they in?
Then ask yourself who you most enjoy working with. What type of people do you like to talk to? Who do you like to spend time with? What type of person is attracted to you and who are you attracted to? Answering these questions can help you determine your market niche based on who you want to serve.
For example, if you love sports, why not specialize in clients who work in the sports industry or provide products for them. If you have a religious nature, work with churches or non-profits. If you love reading and education, work with educational organizations, libraries and the like. If you enjoy traveling, focus on travel agencies, transportation companies, etc.
You can also develop a market niche by adapting products or services you currently offer to a specialized market or for a specialized use. The other day I went to a pet store to get a new litter box for my cat. The plastic litter pan was priced at $9 and a litter scoop for $4. I then drove to the local Wal-Mart where I went to kitchenware and found a plastic dishwashing pan for $2 and a slotted spoon for $1. These items were basically the same as I found in the pet store but when they were marketed for “pets only”the price automatically went up. Higher prices are acceptable and expected in a niche market.
What products do you sell that can be directed to a special market? If you provide cleaning services to the general public, could you direct them to graffiti removal and charge more? If you are an accountant for restaurants, what specific services might be valuable to them? If you develop software programs, can you adapt a standard product to a very specific market?
The final area to consider is the strength of the market niche. Is it growing fast enough to support specialists? How big of a geographic area do you need to have enough clients? Can clients afford to pay you appropriately? Can your product or service be expanded and adapted as time goes on?
Is there any downside to niche marketing? The biggest challenge is you have to be willing to say no to business that doesn’t fit into your niche. Small business owners hate to say ‘no’ to business, fearing that if they do they will lose customers. In reality, when saying no reinforces their position as an expert in a certain area. Businesses who try to be all things to all people are not remembered for any thing in particular and often start competing on price. When business comes your way that doesn’t match your niche, refer it to an affiliate or power partner and build up your referral network!
Is niche marketing for you? You’ll have to answer that for yourself. Just remember, when you develop your niche correctly, you’ll have less competition, higher profits and more cost effective promotions- and you’ll be considered an expert!