You may have heard the phrase “the riches are in the niches.” It’s a popular quote in the marketing world, and with good reason – it’s true. If you ask someone who their business’s target market is and they respond “everyone,” this should make you pause. Translated, “everyone” really means “no one.” Unless you’re planning to be the next Amazon, your target market can’t be everyone. And even looking at Amazon, they have tons of niche markets on their platform. In many ways, they are the pinnacle of hyper-personalization, and no two Amazon home pages look the same.
The alternative to “everyone” is to pick a niche or create a niche.
What is a Niche Market?
A niche market is a smaller segment of a larger market, defined by unique preferences, needs, or identities.
For example, let’s consider the health and beauty market. This market breaks down into multiple sub-categories or niches. Vitamin-based skin peels is a niche. But you could break this niche down further and offer vitamin-based skin peels to people who suffer from acute acne scarring.
Why You Should Create a Niche
There are tons of reasons to create a niche market:
- Low competition: If you create a niche, then you have no competitors. This means that if your product is viable (consumers want it), you have full access to those consumers.
- Pricing strategy: Due to the low competition, you have greater control over pricing. You don’t have to bring your prices in line with your competitors because you don’t have any.
- High conversion rates: You are much more likely to convert a consumer if you speak directly to their wants and needs.
- Authoritativeness: By being specific and narrow in your selection, you can become an authority on that topic. Consumers will trust that you know best because you focus all your energy on a very small area of expertise.
An inch wide and a mile deep
An inch wide and a mile deep is the ethos behind niche markets. By targeting a small niche, your message can be highly personalized and targeted. As a result, conversion rates are much higher than if you cast a wide net.
By creating a niche and being highly specific, you set yourself apart from the pack. In the highly competitive business world of today, it can be difficult to stand out. To use the about example about the skin-peels niche, if someone with acne scarring is searching for a treatment, they’ll be met with a whole sea of results. Google will return thousands of pages, and after looking at a few, they all start to look the same. Your company might be overlooked simply because it doesn’t foster an emotional connection with a niche target audience. However, if you say you specialize in treating people with acute acne scarring, suddenly your company is unique – you grab the consumer’s attention.
The Companies Who Successfully Created a Niche Market
The list of companies who successfully created a niche market is many miles long, but here we’re going to focus on some standout examples.
HubSpot and Marketing Automation
HubSpot became a world leader in marketing automation after pioneering marketing automation software. Marketing automation is about using software to automate marketing activities. Through automation tools, they empower businesses to eliminate repetitive marketing tasks like email marketing, social media posting, and ad campaigns.
Starbucks and Coffee Culture
Starbucks managed to transform coffee from some beans everyone drinks into a fully-fledged culture. As an international chain, Starbucks should feel impersonal, but it doesn’t. Over the years, Starbucks has focused less on coffee and more on the Starbucks experience. People like posting photos of their names written on a Starbucks cup. They get excited for the red cups to come out at Christmas – the coffee remains the same, but the red cup elevates many coffee lovers ‘ experience. Then you have the staff – Starbucks invests a lot of money into training their staff through workshops, apprenticeships, and leadership programs.
Now for a few smaller-scale but very niche examples
Minimalist Baker’s target audience is vegan and gluten-free people who want to eat delicious food without following confusing and convoluted recipes. Many vegan and gluten-free eaters think it’s hard to find tasty recipes that are also simple to follow, so Minimalist Baker aims to solve this problem.
Nerd fitness offers custom workout programs, nutritional guides, and coaching to, you guessed it, nerds. Their tagline is “we help nerds, misfits, and mutants lose weight, get strong, and get healthy permanently.” Many ‘nerds’ find the traditional fitness services to be overly polished and off-putting. They don’t see themselves in the people pushing the services, which can be a major hurdle to finding a fitness regime that sticks. Nerd Fitness solves this problem by providing a service and a community that fits their lifestyle.
Now for a few weirder examples
The Bakon Vodka brand sells…you guessed it, bacon-flavored vodka. If you’ve spent any amount of time on the internet, then you know that the internet is bacon obsessed. Therefore, it only seemed like a matter of time before we’d see bacon popping up in obscure places, like candles, soaps, ice cream, and alcoholic spirits. But if you thought that bacon-flavored vodka is some sort of novelty fad product, you’re wrong. In taste tests, people love the stuff. And the Bakon Vodka brand has been around since 2007 and is still going strong today in 2021.
Remember touching the underside of your desk in school? You found dried gum, many of which had been there for longer than you have been in school. Gross! Gum Busters specializes in gum removal from carpets, pavements, furniture, and more. It’s a genius niche because when a company or local authority realizes the gum situation has gotten out of hand, they’re likely to Google “gum removal” and get introduced to this company.
10 Tips For Creating Your Niche
1. Look for Prospects Who Are Looking for You
This is a mindset shift. Instead of creating a product and thinking:
I'm going to convince people they want this product.
Once I create the product, everyone will see how great it is and realize they want it.
Instead, you’re looking at the market and asking, “what are people looking for but not finding?”. When you find the answer, you have a niche. You will also find it earlier to sell to these people because they don’t need convincing to buy your product; they already want it.
2. Look for Urgency and Pain
When you’re trying to create a niche, look for consumers that display pain or urgency. That is to say; they need this product because it solves a problem that is causing them deep frustration. Or, they need this product because they have an urgent need to fix a problem. The consumers could fall into one or both categories. For example, with the Gum Busters example from the last section, gum in shared spaces causes discomfort and frustration (pain). However, the situation usually isn’t urgent. Usually, the gum problem reaches a threshold where it can no longer be tolerated (the discomfort level is too high), and this is what sparks action.
3. Look For Irrational Passion
Sometimes people want something that may seem bizarre to others, but it makes sense to them. They have an irrational passion for a product they can’t find. Bakon Vodka is a prime example of this. To some people, the concept of bacon vodka sounds horrifying; and others are desperate to get their hands on some.
4. Pay Attention to the Market
This may sound obvious, but you’d be surprised how many niche ideas come to you if you’re constantly paying attention to the world around you. Many companies found new niches through the coronavirus pandemic. For example, there has been an explosion in people seeking educational or tutoring services online. As the world got more comfortable with e-learning, they started to seek out more e-learning options.
5. Ask Who?
Who is the specific person you are speaking to? Do your research and try to find the things the people in your target niche have in common. The one thing they will all have in common is that they have a problem that needs to be solved, and you plan to solve it for them. However, if you want your marketing to land, you need to look at what else they have in common. Do they tend to belong to a specific age group? Do they prefer certain communication channels? Have they recently gone through a major life event (having children/getting married)?
6. Specific the Singular Benefit of Your Product
Consumers respond well to straightforward and memorable messaging. You need to identify your product’s single biggest benefit and find a way to communicate it clearly to your niche. The consumers in your new niche should immediately recognize that your product is a good solution to their problem.
7. Learn to Identify Niches Through Segments
If you want to find a niche, you need to know where to look. One way to look is to start with segments or categories like psychographics (audience mindset), geographic area, profession, culture, style, habits, demographics. For example, with e-learning, the companies who managed to exploit this niche realized:
- Geographic area: This was not important to their target audience. They wanted a no-borders education.
- Habits: They were in the habit of doing activities online via Zoom.
To create a niche from this, you can drill further into the segments and say, “we provide e-learning services to tech professionals”.
8. Identify Problems You Can Solve
If you already have a business and are selling products or services, think about how you can transform those services to solve unique problems. If you haven’t set up your business yet, then that’s fine too!
Here are some ways you can identify problems you can solve:
- Have conversions with your target market. Talk to people one-on-one to see how they feel about your idea.
- Browse forums. When people have problems, they like to talk about them. You might find forums where people discuss a problem in detail, including what things will help them overcome that problem.
- Do keyword research. What keywords are currently trending in certain consumer segments? What does this tell you about the kind of problems consumers are trying to solve?
9. Research the Competition
Have you ever come up with a unique idea and then Googled it only to find someone else is doing the exact same thing? It can be demotivating, but it’s all about perspective. The more you know about your niche, the more you can dominate. If you find a company doing something similar to what you intend to do, you can look for ways to make yourself different. Do you want to target a different segment?
10. Determine Profitability
One of the major advantages of creating a niche is that you can set the product’s price. You’re the only option available, and if someone wants your service, they’re going to buy it and think less about the price. However, it’s worth considering that your pool of potential customers is small by targeting a niche. You have to consider the buying potential of your target audience. Do they typically have an income that could sustain buying your products? How often would you expect them to buy a product from you (how likely are they to be repeat customers?).