Often times, we fantasize about being all things to all people. While being able to satisfy everyone may satisfy our inner “people pleaser”, it can quickly lead to overwhelm.
Even grandiose businesses like Walmart or Amazon have to narrow their focus and cater to a smaller market. For Walmart, they’ve chosen “bargain-minded” shoppers and Amazon has chosen “e-commerce” shoppers.
In business, having your focus too broad can be detrimental, and even cause the business to shut down, so it’s important to be able to answer the question, “What is a niche market?”, and this article will do just that.
- 1 Relevance is Key
- 2 Example: My Start a Business Campaign
- 3 The 4 Steps to Narrow Down a Specific Niche Market and Leverage Relevance
- 4 1. Identify Your Talents, Skills, and Resources
- 5 2. Clearly State the Problem and the Solution You Offer
- 6 3. Illustrate Who is Typically Intrigued By What You’re Offering
- 7 4. Test and Tweak
- 8 Final Words answering “What is a Niche Market in Business?”
- 9 Now, it’s Your Turn…
It’s important to understand your target audience from a demographic and psychographic standpoint. The more you understand your target audience, the more clear you can be with the solution you offer them.
The key to a seamless conversion between marketing thru to the sale is RELEVANCE. The more relevant the marketing is to the consumer, the more likely they’ll be to express interest in the offer. When they explore the offer and identify it as a relevant solution to a problem they have, they are likely to investigate further and purchase.
The conversion usually stops when the consumer decides the offer is not relevant for their particular situation, which is why it’s important to create offers that are highly relevant and targeted to a specific population.
Example: My Start a Business Campaign
For example, I recently did an advertising campaign that I called “Start a Business”. I used the keywords “start a business, starting a business, start business” and I used the broad match type for the ad campaign which means the ad would show to any person who typed in any variation of the words “start a business”.
The ad read “Starting a Business? | Free Training, Websites & Support | Join 1M+ Entrepreneurs starting and scaling businesses using these methods! Web hosting – Training – 24/7 Support – 1-on-1 coaching”. The ad had a conversion rate of less than 5% with a $1.00 Cost per click.
I decided to run a more specific add that read “Starting an Art Business | Free Training, Websites & Support | Join 1M+ Entrepreneurs starting and scaling businesses using these methods! Web hosting – Training – 24/7 Support – 1-on-1 coaching”. In addition to tweaking the ad verbiage, I used a landing page with images relevant to artists.
Overall, the ad was very similar to the broad “start a business” campaign, however, I tweaked the ad to target a more specific target audience. I kept the Cost per click bid at $1.00, and my conversion rate ranged between 12-30%!
These two campaigns are examples of how people respond better to specifics.
The 4 Steps to Narrow Down a Specific Niche Market and Leverage Relevance
For business, depth is more important than width. Lifetime customer value is more important than volume of customers.
One customer can generate millions of dollars in revenue for a business whereas millions of customers can generate less. Accordingly, it’s important to build relationships and build strong understanding for those you serve.
For example, take a look at this cloth diaper company…
Their website says, “Green Mountain Diapers is the leading natural cloth diapering resource since 1998”. Although they have competitors like Pampers, Huggies, or Luvs, Green Mountain Diapers has still managed to dominate a portion of the market and run a thriving business because they selected a portion of a market.
You can do the same thing, and these are the steps to hone in on a lucrative niche market for you…
1. Identify Your Talents, Skills, and Resources
It’s best to offer products and services that leverage the talents, skills, and resources you have. Identify what your current circle comes to you for. Are you the “funny” guy, the optimist, the handyman, the artist, or what solution do you find yourself offering naturally?
Added onto your talents, there are areas where you’ve invested time to hone a skill. What are the areas where you’ve obsessed to learn something?
Don’t overlook the resources you have: time, money, connections, and ideas are all valuable resources that can drastically help your business. Take an inventory of what resources you have, and consider how you can use your talents, skills, and resources to serve a population of people.
2. Clearly State the Problem and the Solution You Offer
With your inventory in mind, think about what problems you can help solve in the market. Whether it’s repairing homes or making fashionable clothing items, there’s room for everyone.
3. Illustrate Who is Typically Intrigued By What You’re Offering
Now, it’s time to narrow down into your niche market. To identify details about your target audience, you want to fill in the blank, “The Person Who is Ready To Buy From me is Usually…”. Some examples can be:
- Between 18-30
- Is interested in entrepreneurship
- May be trying to start a business
- Does not have a strong support system
- May not have a big budget
- Makes between $50,000-$100,000/yr
- Feels strongly about being their own boss, a freedom lifestyle, and leaving a legacy
- Uses keywords like “be my own boss, design my life, etc.”
These are the words that describe people who buy from How To Entrepreneur. What are the words that describe people who are ready to buy from you?
4. Test and Tweak
As you’re in business and you get your lead generation system underway, you’ll learn more and more about your target audience. You’ll get opportunities to communicate or monitor data that tells you valuable information about what’s important to your customers, and as you learn, you should tweak what you’re doing to get better results.
Here’s a video I created to help with niche selection. If you struggle with choosing a niche, this video should help you out. It says it’s for online business, but it could still be relevant to brick and mortar business owners as well. Hopefully this helps.
Final Words answering “What is a Niche Market in Business?”
The goal of this article was to answer the question, “What is a niche market in business?”. As you can see, a niche market is a small segment of a larger market that a business focuses on to create products and services of significant relevance.
Hopefully these examples were useful for you. If you have questions or concerns about this, don’t hesitate to leave them in the comments section. I’d love to help you out!
If you’d like to start or scale your business, check out my free e-course! It’s a framework to grow a business: from idea to full-time income, and from full-time income to enterprise. Check out the free e-course here.
Now, it’s Your Turn…
Have you selected a niche market for your business? How did you narrow your focus? Have you seen benefits from choosing a smaller segment of a larger market as your focus? Share the results below.