The importance of a niche market

niche(niche)

• (one’s niche) a comfortable or suitable position in life or employment: “he is now a partner at a leading law firm and feels he has found his niche”

• a specialized but profitable corner of the market: [as modifier] : “important new niche markets”
   
   

  

It’s natural for many business owners, when starting out, to want to appeal and sell to as many people as possible. The strategy is simple, by reaching more people, and expanding your market, you can sell more products and have a bigger profit. However, unless you specialize in a commodity, or sell a product like Coca-Cola, it may not be in your best interest to spread your markets so thin.

In many cases, the broader your service or market is, the more competition there’s going to be vying for your customers. This competition can range from companies smaller than yours, to massive corporations with gigantic marketing budgets. Therefore, by trying to go after everyone in your industry, you risk becoming just another small fish in a big pond.

For example, let’s say you have a web design firm. You make fantastic websites, your customer service is great, and you have a few happy clients. Naturally, you’ll want to go after every potential client you come across, simply because you can get the job done and you can make a profit. However, now that you’re offering websites to just about anyone, you’re just like every other web developer out there.

To combat this, you need to find your niche. You need to find a specific market or specific service that you provide that sets you apart from other businesses. For example, what if your web design firm only made websites for the medical field? What if you only made websites for lawyers? (ex. www.findlaw.com). Suddenly, you’re not just another web design firm, you’re a lawyer/doctor/whatever-your-niche-is web design firm. What are a few advantages of doing this?

• When you approach a potential client in your niche market, you automatically have an edge over your competitors. By being specialized in one specific service or market, you’re a lot more memorable than your competitors. For example, who is going to get more attention, the person who introduces themselves as a travel agent, or the person who plans exclusive scuba diving trips for adventure-seekers? Being unique makes you more memorable.
• People like to hire companies that make them feel comfortable. A lawyer would much rather hire someone who specializes in lawyer websites then someone who does all sorts of websites. While there may not be much difference in a lawyer website and a general website, and you have the capabilities to make any site you want, your narrow focus helps you impress potential clients.
• By becoming a specialist or expert, you have an opportunity to increase your rates above your average industry competitor. Since you are offering a service that’s unique, and in many ways, seen as superior for your niche market, clients are more willing to pay extra for that expertise. While you shouldn’t be charging unreasonable fees simply because you offer a specialized service, it does give you a good reason to justify your rates.

While in the end, you are narrowing your market, and you may have to turn people down, you set yourself up to tap into a niche market that can provide you with a lot of loyal clients and increase revenues.

Most successful small businesses have found a niche that makes them profitable. Some real estate investors only manage Duplexes, some application developers only focus on the Apple iOS platform. While many of these professionals are capable of offering services or catering to bigger markets, they choose to focus on a specific market that’s profitable and stable.

Take some time to review your business and services, and see if there’s a niche that you can take control of.