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What is a market niche? Simply stated, it is a narrowly defined group of potential customers.
In small business, you want to avoid high-cost mass marketing, which can be extremely wasteful of limited resources. To use an analogy: Why cast your fishing pole in the ocean when you can maximize your chances of success by fishing in a smaller pond?
Most business owners can create greater return on investment by narrowing their focus to appeal to a highly specialized segment of potential customers; effectively making a big pond, small.
By targeting your prospective clients with a razor-sharp focus, you are also able to cater more specifically to their unique needs, which cannot be as easily achieved by a mass-market competitor.
A well established market leader manages to the general needs of the masses, generally not to highly specialized needs. By casting such a wide net, market leaders in effect limit what they can do, and the choices they are able to provide to their customers. The level of detail required to provide superior service to a highly specialized audience does not typically align with a volume-driven mainstream market leader's approach.
The great news for small business is that a highly specialized group, the market niche, exists within every mainstream market. Every small business has the opportunity to be the big fish in a small pond, and profit handsomely from a unique business idea.
"I skate to where the puck is going to be, not where it has been."
- Wayne Gretzy, Hockey Star
So, how do you find your market niche? One key question can point you in the right direction:
"How can I make this product or service better?"
Here's a quick example: Years ago, when training for my first and only marathon, I learned that runners need to re-fuel during long runs. But I didn't want to have to carry a backpack to carry my food, which consisted of a packet of this gel substance called "Gu". I wanted to carry the Gu packet that would be close to my body and not interfere with a comfortable pace throughout the run.
The little key pocket in the front of running shorts wasn’t going to work. I wanted shorts with an outside zippered pocket, just the right size for a Gu packet or two, in the back of the shorts, centered just below the waistband. I searched high and low for the perfect running shorts, but had no luck among the big brands.
Today, with the increased popularity of marathons and new technology and designs, it's easy to find the perfect, highly-specialized shorts with a back zippered pocket - just the right size and place to store your running fuel.
This is a perfect example of business effectively servicing a market niche.
- Josh James, co-founder and CEO of Omniture, founder, and CEO of Domo
There is tremendous opportunity when creating a powerful brand when you focus your efforts and resources to serving a specific market niche. Some of the greatest business successes come from making an important improvement on an old idea and effectively marketing that product to a niche market.
There are several key advantages to identifying a market niche:
As a business owner or salesperson that serves a niche, you must make every effort to know your customer's wants and needs, and because you have the ability to cater more specifically to their desires, you can become their supplier of choice. Business planning and managing to what your client wants will always be key to your success.
Now think about your own industry and who the major players are.
Ask yourself, what do they do well; what do not do well; how could you
do things better? It just takes a small idea to make a large and
powerful impact for the customer.
Take that one idea and create a niche opportunity for your business. By providing a unique value on a smaller scale, very soon you may become that big fish in a small (but highly profitable) pond.