We begin this post by asking the key question- what is a niche?
What is a niche?
A niche is the detailed and profitable segment of any market with a focused audience who is looking for a solution to their problem. The oxford dictionary defines it as “A specialized segment of the market for a particular kind of product or service.” This definition places emphasis on a sub-segment of a whole. Hence, it can be further segmented into more categories such as sub-niche, and under that sub-niche, there could be more sub-niches to uncover.
It is important as a business owner to define your unique and profitable niche – otherwise, you may end up with the 42% of businesses that reported in a survey conducted by Fortune on why startups fail, the “lack of a market need for their product” as the single biggest reason for their failure.
But, with a niche, you can better differentiate and position yourself as a brand. Such positioning allows you to leverage opportunities that support your targeting of a specific audience aligned with your products and services. Additionally, appealing to a niche market allows you to target an audience who is looking for exactly what you have to offer, which makes them more likely to convert and remain loyal customers. Furthermore, the more specialized your offerings, the less competition you’ll be up against, giving you a competitive advantage within the larger market and reduced-price competition.
Here are four simple steps to identifying and establishing a unique and profitable niche for your thriving business:
Step 1: Identify your strengths and area of interest
To begin the process of identifying your niche, first consider your area of interest, this should be something you’re passionate and knowledgeable about, and something you can see yourself still being interested in for years to come. Secondly, consider what your brand has to offer and your strengths. Leverage your strengths, skills, and qualities to show your audience exactly what it is that differentiates your brand from the rest of the competition
Some of the questions to ask yourself when identifying your niche include:
- Who do you want to serve?
- What are you and your team skilled in?
- What problems do you solve?
- What are your brand’s strengths?
- What area/s are you particularly knowledgeable about?
Step 2. Identify your target market
As soon as you have identified where your niche is going to be, it’s time to figure out who your target market is. Your target market is that defined group of customers to whom your business wants to sell its products or services. It’s important to note that having a target market doesn’t exclude others from buying from your business. What it simply means is, that you are choosing to focus most of your efforts on a group that represents your “ideal customer”.
Effectively identifying your target market is one of the most important steps toward business success. Getting it right will enable you to direct business resources to those customers with high potential for sales growth, interest in your products or services, and loyalty to your brand.
Here are a few questions to stop and ask yourself when determining exactly what type of customers you want to target:
- What are the demographics of the ‘ideal customer ‘that would be most likely to use your product or service?
- What location are you looking to target?
- What is the psychographics of the ‘ideal customer’ who would be most likely to use your product or service?
- What does your current customer database show?
- What benefits can your product or service provide to consumers?
To answer the above questions, you’ll need to conduct research on your buyer’s personas. There are numerous tools to help you do this, including HubSpot’s free buyer persona template. Research potential customers to determine their buying behaviors, interests, and pain points. Understanding these things will help you define how your product or service can meet their needs.
Step 3: Research your competitors
Regrettably, it’s not likely you’ll find a niche with absolutely no competitors. As in all businesses, it pays to assess the competition. Who are your competitors targeting? What kinds of people are walking through their doors? Who’s interacting with similar businesses online?
Although this exercise may help you identify potential customers, the real value lies in identifying opportunities to give your product or service a point of differentiation and find a niche market opportunity the competition may be overlooking. If you do find an utterly untapped niche, it might be a sign that others have attempted to tap it and found it unprofitable. In the end, competition is a good thing!
Start your competitor analysis by entering keywords related to your business idea that your target audience would use. This will bring up all your potential competitors, so you can sift through their websites, social media profiles, paid advertising, and product listings to see what they’re doing.
Completing a competitor analysis will help you identify exactly how you’re going to stand out from the crowd. Make a list of top competitors, analyze their websites, and think about what you can do better than them. Start by asking the following questions:
- What kind of content are they creating?
- How regularly do they post content?
- How engaged is their audience?
- How have they approached their branding?
- What’s their tone of voice?
- What are their customers saying about their product or service on review websites?
- How can you differentiate your brand from them?
- What’s your unique value proposition (UVP)?
Step 4: Assess your idea’s profit potential
Before you make your final decision; however, you’ll want to make sure that you determine how much money you have the potential to make money. The profitability of your idea is determined by the revenue potential from operations, less the expenses. The greater the result, the more profitable your idea is. The factors affecting profits include demand for your products, the cost of making them, the general economy, and the competition you face. These are all the areas that you have to assess in arriving at the decision that your niche idea is profitable.
You can start your assessment by first conducting a simple Google search. If you find similar products but not much competition, it’s a good sign your idea has the potential to be profitable. You’ll want to take a look at competitor products or services to see how they’re priced. This will help you to competitively price your products or services.
Also, use the Google AdWords keyword planner to search for keywords related to your niche market and the specific products/services you want to offer. Typically, if you find at least 10,000 searches per month, it’s a good sign of a profitable niche market. Google Trends can also help you to identify trending topics to better analyze search volume. Of course, there are other online product and service review sites that can help with your assessment.
When assessing profitability, think about whether or not your niche is evergreen. Are your solutions providing consumers with something they can’t live without? Are you selling a product that they’ll keep coming back for, like food, drinks, or beauty products?
You also want to keep in mind that you don’t have to start your business with your own product or service. You can choose to work with other product creators, advertisers, and site owners in your niche to start generating commissions as an affiliate marketer, while you work on creating your own unique niche solutions. Affiliate marketing is a great way to earn money in a niche while you are working on developing your own products or services. The idea behind affiliate marketing is that you market and advertise a company’s product on your website and get paid a commission when your target audience purchases the item through a link on your site. It’s a quick and easy way to get your own business up and running.
Having a singular focus can be extremely profitable if you first build your organization to master it and then strategically grow with complementary products or services. Once you’ve successfully confirmed the viability of your niche idea, you can start developing your website and determining the products or services that you are going to sell. While there isn’t a perfect process for finding a profitable niche, you want to be sure to do your homework and make sure that you won’t be wasting your time, money, and effort developing a niche that won’t be profitable.
Learning how to find a unique and profitable niche can be time consuming, but will be well worth it in the end when you start to make money. Once you complete your research, you’ll know which of your niche market ideas has the most potential to be profitable, and you can start taking the necessary steps to get your business up and running.