Do You have a Better Product Than Your Competitors?
It’s good news if you have, but before you start marketing and selling your product you need to find those customers in your marketplace that are most likely to buy your product when they are approached?
It’s easier to do this if you have a niche marketing strategy. In this article we’ll show you how to set about developing one.
What’s a Niche Marketing Strategy?
When you have a good product or service to sell it may seem obvious to launch it into the largest marketplace you can find. The problem with this approach is it can take a lot of time (and money) to identify your best sales opportunities in a large marketplace, and because its an obvious marketplace for other companies with products like yours competition can become intense.
Perhaps you believe that your product is unique in the marketplace, but that doesn’t mean it’ll be easier to sell. This is because it usually takes potential customers a long while to understand the benefits of a unique product.
If you are a small business the most sensible strategy is to identify a small section of your big marketplace and concentrate on selling to companies in that section. This is called a niche marketing strategy.
Bigger companies don’t always choose to use a niche market strategy. They probably did when they started, but once they have entered the ranks of large companies they can set large marketing budgets and employ lots of sales staff to open up new markets. A big company is also able to accept the fact that it may take many months before it gets a payback from selling a new product. Big companies are also able to use their resources to deploy strategies to knock out other competitors in the marketplace.
You can’t do this if you’re a small business. When you launch a product its vital to quickly make sufficient sales to cover costs and achieve growth. You can’t afford long payback periods. You need to find your new customers quickly and convince them about the benefits of your product. You need an effective niche marketing strategy!
What Does a Niche Market Look Like?
When you develop a niche marketing strategy tyou are concentrating your marketing and sales resources on a group of customers with similar, recognizable needs.
And because of the similarities within this group of customers you can shape your marketing communications and sales activities so that they meet the needs of the group far better. And because of this you can get much closer to the the recomenders and buyers within this group, and become much more effective at fending of the advances of competitors (even the big ones)..
The Power of Niche Marketing
Why niche marketing? After all, if you’ve got a product for a clearly identified marketplace doesn’t it make more sense to spread your marketing and sales efforts as widely as possible?
The truth of the matter is, that if you’re a small business, narrowing your focus onto a niche market will provide you with the marketing power you need to grow your business profitably and fast.
Four Benefits of Niche Marketing
1. Prospecting for Business in a Niche is Less Expensive
If you pick the right niche it will become easier to contact your prospects. It’s possible to get lists of names within niches quite easily (e.g solicitors, estate agents etc.) and details about groups and associations within a niche are also often freely available.
2. Your Product Will Appear More Attractive and Desirable
Within your niche you’ll find that buyers like the idea of a product made specifically to meet their needs. Usually you don’t need to fundamentally alter a product for a niche if it was originally intended for the marketplace of which the niche is a part. In most cases it’s sufficient to change the product packaging (and perhaps the name) for the niche and/or provide specific niche-related services alongside it.
3. You Get Well-known in Your Niche More Quickly
Once you’re established in a niche market, people will start to talk about you. Plumbers talk to other plumbers as much as solicitors talk to other solicitors, and if your product is meeting an important need, they’ll recommend you.
4. Within a Niche There’s Likely to be Less Competition
When you focus on a smaller area within your overall marketplace and target your products to meeting the needs of that area, you’ll find there’s much less competition.
In fact, the chances are that you could become the dominant player in your niche.
How to Select the Right Niche
It isn’t always easy to decide upon the right niche to market in. Lots of small businesses have come to grief developing products for niche markets only to find their niche doesn’t want to purchase them.
Use the following questions to help you choose the right niche to market in:
Q1. Can my niche afford my products and services?
If you develop a product that you know your niche needs but find they can’t afford to buy it you’ve probably selected a bad niche. Sometimes there are things you can do to get round this problem but if this results in lots of additional costs it might make it uneconomic to continue working in the niche.
Test your niche beforehand by asking prospective customers if they would be prepared or are able to afford your product as well as whether they would buy it at the price your selling it.
Q2. Can you easily and affordably contact buyers in your niche?
Suppose you set up a business to carrying out minor paintwork repairs on damaged cars. How are you going to find the customers in your niche without spending lots of money on advertising and marketing?
If, on the other hand you have an accessory product for motorists you should be able to contact a large part of your niche through motor accessory stores and shops.
Q3. Have you evidence of others selling successfully in your niche?
This is often a significant obstacle for creative technology companies. They often develop innovative products that they feel confident they can sell in their marketplace. However, its not at all unusual that when it comes to selling these products buyers are very resistant because they aren’t prepared to make changes in the way they do things to enjoy the benefits of the new technology.
With a lot of hard work It may eventually be possible to open up difficult niche markets like these, but it might take a long time and cost you a lot of money.
If it becomes apparent that you might be in a position like this it may be better to think again and find a niche where there is already an established need that you can meet better than current suppliers (i.e. develop the better mouse trap).
Q4. Is there much competition in your niche?
If you’ve selected a niche which lots of other suppliers are interested in you could well find that it takes far too much time and money to develop your business. The secret is to find a niche before it’s discovered by others. If you go into a niche where there are already established competitors you must be fairly confident that your product provides benefits that theirs don’t.
Q5. How well do you know your niche?
If you have ever purchased a product or service from someone who knows his/her market area extremely well you’ll realise the importance of this question. A supplier with extensive knowledge of a marketplace is always in a better position to sell his/her products.
If you are not very familiar with a niche and don’t have solid experience in it, team up with someone who does, or take as much time as you can finding out about it by talking to prospective customers, going to trade shows and talking to other competitors (if you can) and suppliers.
Q6. Is the niche big enough to make your business viable?
You must be certain that over the long term your niche will generate enough money to enable you to build a thriving business. If you can’t get hold of data to enable you to do very precise research, carry out some market research fieldwork and make some intelligent guesses to build up a financial model of your niche.
– How many potential buyers are there in my niche?
– How much do they spend on my type of product each year?
– How many other similar products are there in my niche?
– What percentage of my market can I expect to win?
For high cost products with a good profit margin you may only need a very few customers to make your business viable. Other products may require much large numbers of customers before you start making money.
Evaluate and Compare Several Niches
Don’t make your final choice of a niche before you have evaluated and compared a number of similar niche areas. You don’t need to assess every niche area in detail, but use the questions above to score each niche area and select the one in which you have the greatest chance of success.
If you’re able to find several similar niche areas, in all of which you could sell your product (suitably modified or packaged for each niche) start with the niche that looks the most promising and then move on to develop the less promising or difficult niches afterwards.
For example, if you have developed a keep-fit product which could be used by either beginners or professional athletes, evaluate each of these niches and choose the one which is easiest to get into and develop. After you have made good progress in the first niche, start working in the second one.
If you plan the development of your niches in this way you should be able to make incremental profit from niches that might not otherwise have been viable.