Have you ever thought of turning your passion into a business? Many businesses offer a wide range of products or services but struggle to become the market leader for each of their offerings. Instead of targeting a broad population, your idea could focus on a small portion of potential customers. Narrowing your scope provides the opportunity to be the best at what you do.
For example, you might combine your passion for knitting with your love of cats and start your own cat sweater business. More broadly, your customers are pet owners but they have a specialized interest (or need) -- cat sweaters.
In this case, the consumers you're targeting are members of a niche market.
What Is a Niche Market?
The definition of a niche market is a focused subset of a broader market of consumers or businesses. This group has a specific set of needs that can be met by a targeted product or service that addresses those needs.
Working in a niche market is a way to stand out from competitors, helps you establish a positive reputation, and boosts your authority as an expert in your field of business -- ultimately attracting more customers to your product or service.
Now that we have a better idea of what a niche market is, let's take a look at the steps to find one.
How to Find a Niche Market
Reflect on your passions and interests.
Identify customers' problems and needs.
Research the competition.
Define your niche and its profitability.
Test your product or service.
1. Reflect on your passions and interests.
Is there a hobby or skill you're particularly passionate about or good at? Take some time to reflect on your areas of interest as potential niche market ideas. Below are a few questions to spark your brainstorming:
What skills come naturally to you?
How do you enjoy spending your free time?
Do friends, family, and colleagues ask for your advice on a specific topic?
How do you approach problem-solving?
What topics do you enjoy learning about?
Write down your answers to these questions, and begin a list of ideas to consider for your business's niche market.
2. Identify customers' problems and needs.
Now that you have some business ideas, think of the problems faced by your target market and how your passion or interest can become a product or service that meets their needs. What's their motive to buy?
Before devoting your time and energy in developing a brand new business, you'll want to research your potential competitors. You might have a viable product idea, but how many other businesses will you be competing with?
Use these tools to explore the best-selling products consumers are researching, and see if your new business can meet their needs.
4. Define your niche and its profitability.
If you're dedicating your resources and time to a new business, it's important it has the ability to become profitable. Here are a few factors to consider when finalizing the niche you'll be catering to:
Customer values and interests
When researching, if you find a fair number of similar products, but not an overabundance of products -- this means your idea could be profitable. Take a look at the price points of your competitors' products so you can price your own competitively. Resources like Amazon (for products), G2 Crowd (for software), agency directories (for services), and price monitoring tools like PRICEFY.IO are helpful in the process of evaluating your competitors' pricing, and determining prices for your own products and services.
5. Test your product or service.
Create a simple website or landing page for your business so customers can find you and research your business. Offer a trial period of the product or give out free samples to your target customers. This initial test period should not cost a large amount of money, but you can certainly use paid ads to drive traffic to your website.
To see if people want to put money towards your product, take advantage of tools such as crowdfunding sites. Not only can you gain funding you'll also get your product in front of potential customers.
If the test is not as successful as you hoped it would be, don't scrap your idea entirely. Go back to the drawing board and see if there are any key areas where your product or marketing could be improved.
Still not sure what a niche business looks like in practice? Below are a few examples of businesses that cater to niche markets.
After leaving their corporate jobs, sisters Katherine Kallinis Berman and Sophie Kallinis LaMontagne decided to pursue their passion for baking and opened up Georgetown Cupcake. Unlike other bakeries that create cakes and other sweets, their sole product is cupcakes and they were able to perfect their recipes by focusing on one product type.
2. A cleaning service for college students (Dorm Mom)
Instead of giving haircuts, Drybar's services are limited to blow drying and styling, and they offer a few hair styling options. What sets Drybar apart is it's "based on the simple concept of focusing on one thing and being the best at it: Blowouts."
4. A workout studio that only offers indoor cycling classes (SoulCycle)
SoulCycle is a 45-minute indoor cycling class that sets itself apart from competitors by only offering a specialized spin class. It also stands out from other fitness studios due to the community of dedicated cyclers it built.
5. A clothing store that sells men's accessories (Ties.com)
In the broader market of menswear, Ties.com stands out by only selling accessories like ties, socks, pocket squares, etc. Since their products make up a small portion of the menswear industry, they stand out from the competition by creating unique, high-quality accessories.
By launching in a niche market, you'll become an expert in your area of business and set yourself apart from competitors. To learn more, read about how to start a business next.
Originally published Oct 24, 2018 7:30:00 AM, updated October 24 2018