Niche marketing is about defining what makes you unique in terms of your inherent capabilities, competitive differentiators and those customers you are uniquely suited to serve. My simple 3-point approach will help you deconstruct this concept and apply it to your business.
A niche is usually thought of as a slice of an existing market and something you find rather than something that comes about deliberate effort. I prefer to talk about creating and serving a niche market based on the premise that everything happens through your conscious effort.
Niche Marketing Step 1: Yourself
Every serious endeavor should begin with introspection and creating a strategy around a niche to focus on is no different. Think about starting a business: is not the first step to ask, "What can I do? and "What am I good at?" In the same way you should focus internally first on yourself, your company and your product or service.
Instead of simply searching out an existing marketing for an existing product you should try instead to embrace a more holistic philosophy that begins at the drawing board. Map out the internal strengths and weaknesses of yourself, your business and your product or service before thinking about your competition and your customer.
What you are good at doing and what you enjoy doing are usually the same thing and this is no different for a business. In creating and serving a niche market you must therefore endeavor to stay true to those principles and values that fuel your business passion. This may mean passing over business opportunities that are not in your "sweet spot".
Niche Marketing Step 2: Your Competition
You cannot do business in a bubble and so the realities of the market and competition are things you have to factor into your business plan. That being said, today more than ever there is boundless opportunity for individuals and businesses to cash in on their individuality.
The traditional approach to business is going head-to-head with your competition and although this still holds true it is also true that you can always win out by creating and serving a niche. If you can capture a segment of the market based on your unique business then this is something that no one can take away from you as there is only one you.
In some businesses and for some products or services more than others competitive forces will be stronger. Nevertheless, in seeking to differentiate yourself make sure that you focus on your individuality as a business and not just features, functions, benefits and so forth.
Niche Marketing Step 3: Your Customer
The customer end of the equation in creating and serving a niche is figuring out who your customer is and then applying the 80/20 rule and figuring out who they really are. The 80/20 rule in business is that 80 percent of your sales come from 20 percent of your customers. Therefore, niche marketing is about finding out who those customer are and focusing on serving them.
I want to stress again that niche marketing stems from the philosophy that individuality breeds success. Just as there is room enough for all people in the world to succeed so there is room enough for multiple business in the same industry to succeed. Each business is different and as you find your unique business individuality you will attract and retain loyal customers.
When you ask the question, who are my customers you will come up with characteristics that separate your customers from the public at large. Perhaps they share a similar hobby or interest or perhaps they all come to you with the same need that needs fulfilling. Maybe they just live in your neighborhood and that is most all they have in common.
Once you have understood the general characteristics of your customers you can then narrow this down to the specific characteristics of that 20 percent you are your power users or niche buyers. The purpose in analyzing your customer is not just to categorize them and leave it at that but to understand them better in order to serve them better.