How to find the best and most profitable niche for your products
The best markets are not the biggest
It is quite understandable that you choose the largest possible market in which to sell your products. But if you have a small business, the largest markets are not necessarily the best.
The largest markets may be the best known, but they are also the most exploited. In large markets you will find many competitors, more resistance from consumers, and a lot of price competition.
If you’re not very careful, your huge market full of opportunities could turn into a wasteland for your business because no matter how hard you try, your battle with established competitors will be long and difficult.
A solution! – The commercialization of the place
If you are a small business and you want to achieve rapid business growth, the best strategy is to look for sales opportunities that you can convert better than your competitors. This is the main idea behind “niche marketing”.
In this article and the next, we’ll provide a five-step plan for implementing a Niche Marketing Strategy.
Five Steps to Developing a Niche Marketing Strategy
What are the five steps of niche marketing?
1. Divide your “big” market into smaller market segments
2. Identify niche areas for your product within these segments.
3. Research these niche areas and estimate your market potential.
4. Create a profile of potential customers in these business niche areas.
5. Develop a solid product proposition for these clients.
In this article we will focus on steps 1-3.
1. Your market segment
Market segmentation has been around for a long time. You may have already done some segmentation of your market by deciding to focus your attention on a particular geographic area or socio-economic group (eg, small businesses, young professionals, industry type, etc.).
Now take your targeting one step further and look at other ways you could divide your market. For example, a manufacturer of devices for gasoline and diesel engines decided to segment its market into family cars, commercial vehicles and boats.
2. Identify business niche areas
When you have a list of market segments, keep in mind that although you may think that your product is suitable for all the segments that you have selected, in each segment there will be some groups of companies or people who will need and want your products and others who do not. they will.
These groups can be your first niche markets. For example, the manufacturer we talked about earlier decided that it would be better to focus on “family pleasure boats” as a niche market rather than “high performance boats” because they had a lot of knowledge and experience of the types of engines used in boats. recess.
So, look for the business niche areas within each segment and find niches where you think your product will perform well. Spend as much time as you can on this.
It is not always easy to find niches in an existing market or identify new winning niches in which to build a business. But fortunately, there are many resources online to help: local business directories, Internet directories, websites with information on trends and fashions. In addition, large retail sites such as Amazon and eBay provide information on the sectors and market niches in which many of their products and services are sold.
In addition to using the Internet, you may need to do some research over the phone and at your local library, especially if your business is more focused on the local community than the broader “global Internet” market.
3. Research your niche areas
Once you have a list of niche markets that you are reasonably sure of, you will need to estimate the size and business potential of each. It’s easy to skip this step, but if you do, you might find out after spending a lot of money and doing a lot of work that you are trying to build business in a niche that is not commercially viable.
Research each niche to find out:
a) Probable level of customer demand
b) Commerciality (that is, can you make money from it?)
c) Niche competition (who and how much)
One of the best niche strategy tools to help you with some of this research is also free. It’s called the Google Keyword Tool.
This tool is most often used for Internet-based businesses, but it can also be extremely useful for local businesses that market and sell, as well as online.
– Probable demand for your product
Most consumers (home and business) today tend to use the Internet to help them make decisions about what and where to buy. They do this by entering combinations of words and phrases (keywords) into Google and other search engines in the hopes of retrieving useful information. All the major search engines store these keywords in vast databases that can be interrogated to find how many people around the world are searching for particular products or services.
This tool will also provide you with ideas on other keywords and business niches that you may not have considered.
– Commercial value
The Google Keyword Tool will also provide you with information on the business value of your niche. It does this by providing you with data on the prices advertisers are willing to pay for ads on the Internet based on their keywords.
This whole area can be explored by spending some time researching the Google ad words and ad sense, but at this stage all you need to focus on is the cost per click (CPC) figures that the Keyword Tool provides. of Google.
You can find out about global and local competition in your chosen niches using the “Advanced Search” feature of the Google search engine.
Use your keyword phrases in the search engine to find out about potential competition volume. Research the search results on the first few pages. These are the main competitors that you will need to test and overcome. If you are focusing on local marketing, use the advanced search feature to include other suitable keywords, such as your geographic location (for example, “Oxford”).
When you are doing your research work, don’t forget that many of the companies that appear as competitors may not be serious competition to you because, although they are selling products to your niche, they may not be treating you as a specialist. zone.
4 and 5. Create a customer profile and develop a product proposal
At this stage, you will have a very good understanding of your niche and can start profiling your prospects in this niche and producing sales and marketing materials specifically tailored to their needs.
It is at this stage that you really start to differentiate yourself from your competitors. The two steps you need to take to achieve this will be covered in our next article on niche marketing: “How to find the niche customers that He wants to buy your products “
Expanding your niche strategy
Once you have started to make progress in selling your products in one niche, start working on another niche. For each niche, you will probably need to change your marketing materials and messages a bit, but it will be based on a knowledge and experience base that will allow you to develop your niche strategy very easily to include other suitable niche markets.