Before introducing a product to the market, the first thing to do is determine what will set you apart from other competing businesses and potential customers who will be interested in purchasing from you.
If you go to market without a strategy, you may end up targeting customers who may have already been cornered by established players in your industry.
Yet identifying the areas in which you excel and the potential customers who will be attracted to what you offer is easier said than done.
So how do you position yourself for success in your industry?
The answer is to identify an untapped niche in your target market, then master it by exceeding your customers' expectations.
In this article, I'll show you how to develop a niche strategy and highlight businesses that have successfully adopted a similar approach.
What is a niche strategy?
A niche strategy is a business decision to design and create your product or services for a specific part of your target market.
You will target this demographic in your market because they have needs and preferences that are not met by the options available in your industry.
For example, the sportswear industry was dominated by Nike and Addidas for decades, but Under Armor managed to carve out a niche by focusing on selling moisture-wicking sportswear that can stay dry after absorbing perspiration.
The company's founder was an NFL football player and the product was an immediate hit with his colleagues. Under Armor has since become a multi-billion dollar brand with its own loyal customer base.
Why is a niche strategy important?
The barriers to entry when it comes to starting a new business are not that high. Anyone with an idea and a little capital can start a new business or online business.
This means that whatever idea you're thinking of right now, there are plenty of people considering doing the same thing.
To succeed, you must focus on mastering a corner of your target market and distinguish your business from your competitors.
Niche marketing will help you deliver the right message that will resonate with your ideal customers and you can build a unique identity in your industry.
How a niche strategy is different from other strategies
There are two main business marketing strategies; niche marketing and mass marketing.
While a niche marketing strategy focuses on a specific demographic within the target market, a mass marketing strategy targets the entire customer base in that industry.
The two approaches have different objectives. Niche marketing aims to dominate one market segment in another to establish a loyal customer base and maximize profits.
With a mass market strategy, the goal is to reach as many potential customers as possible in order to achieve the greatest possible sales volume. These companies typically sell daily necessities that appeal to all customers, regardless of demographic.
For example, a low-cost domestic airline like JetBlue serves as many people as possible, while a luxury private jet charter company like ExecuJet markets its services exclusively to wealthy individuals who can afford charter flights.
How to Create a Niche Marketing Strategy
Here are the steps you need to take to successfully develop the unique value proposition that will help distinguish your brand from other brands in your industry.
Step 1: Establish Your Niche
The goal at this point is quite simple; study your target market to find a problem that has not been solved by existing products and services or the inadequate solutions that currently address it.
Get to know your customers intimately. Are there potential customers who want something more affordable, a more premium product, something made from sustainable materials, or a comprehensive solution set that solves several related problems?
To learn about their pressing challenges, go online and browse social media platforms to see what they're talking about. Check out customer Facebook groups and online discussion forums related to your industry.
Google Search is another great tool you can use for your research. Enter relevant keywords, then note additional keyword suggestions in the search bar drop-down list.
Keyword research will show you what people in your target market are looking for and you should be able to identify needs that are currently not being met by existing solutions.
For example, if you type “healthy snacks” into the Google search bar, you will get results such as: “homemade healthy snacks”, “healthy and nutritious snacks”, “healthy snacks under 150 calories” and “healthy lesson snacks”.
Let's say that the snack market is currently dominated by companies offering sugary snacks; you can then develop and sell a niche product that is sugar-free and marketed to this segment of customers looking for healthy diabetes snacks.
You can use any of the following factors to shape your unique marketing pitch:
- Geographical : You can choose to focus on people living in a specific city, state, region, or even country (regional airline Horizon Air)
- Demographic data : With this approach, you will design a product to meet the needs of individuals of a specific age, gender, education, or income level (Girlfriend Collective – women's activewear brand)
- Psychography : you will focus your product on the unique values or interests of a specific group of people in your industry (Tesla for environmentally conscious drivers)
- Price : With this approach, your product will be designed for customers who are comfortable with a specific price point. It can be free with paid add-ons, discounted or premium. (Louis Vuitton luxury products for wealthy clients)
- Innovation : your product will be designed and built to far exceed the quality and capabilities of existing solutions (the original iPhone that changed the mobile phone market)
Step 2: Evaluate the feasibility of the idea
At this point, you would have selected a niche that you want to target, but before you go any further with the process, you first need to determine if there is a large enough market to support your business.
There is no point in dominating a segment of your market if it is too small for you to achieve profitability. The market also needs to be large enough that you can increase your sales and revenue over time.
You can use tools SEO like Semrush or SimilarWeb to get the search volume of the keywords that inspired your idea. Compare these volumes to other keywords representative of existing products in your industry that drive sustainable business.
Another thing you need to check is if your niche audience is interested in your novel idea. The product or service you offer should not only appeal to your target audience, it should also solve a problem or satisfy a need.
If it doesn't offer any unique benefits that customers will be willing to pay for, the new product may disappear and you would have wasted time and resources.
A customer survey will help you find out whether or not customers have a good reason to buy your new product.
Step 3: Understand your target audience’s problems and solve them
Once you've confirmed that your niche idea is viable, it's time to build an overall picture of your target customer.
What you've done so far has proven that there are customers for an untapped segment of your industry, but you still don't know much about those customers. This step is about connecting on a deeper level with your potential customers to understand their demographics and the features they want from your product or service.
The best way to do this is to develop a buyer persona . This is a profile of your potential customer showing their age, gender, profession, income, interests, preferred social platforms, hobbies and other information.
The information you obtain will help you design a product that best meets your customer's needs. This will also help with brand messaging.
You will have gained a deep understanding of what interests them, so you will be able to tailor your marketing tactics appropriately without wasting money on marketing.
For example, Malenki Shoes is a niche brand that sells stylish heels designed for petite women. The company's founder noticed that women with small feet were forced to wear children's flats or settle for the wrong size shoes and then decided to address this need.
Today, the company has a loyal customer base and has been particularly successful in the field of influencer marketing.
Step 4: Know the competition
You need to study your competitors' strengths and weaknesses so you can identify what your business can do better to entice customers to choose your brand over other alternatives.
The more you know about your competitors, the easier it will be to develop a distinct niche strategy.
For example, ThirdLove is the only lingerie company to offer bras in 78 different sizes. To stand out from its competitors, the company founder decided to focus on body diversity as a niche strategy. They have such a wide range of products that everyone can find the best bra fit and size.
They also built their brand around body positivity, and that message resonated with hundreds of thousands of loyal customers.
Competitive analysis is very useful when developing a marketing strategy. It will help you identify valuable information about your competitors, including:
- The social media platforms they use to promote their brand,
- The strategies they use to interact with customers,
- And the keywords they target with their Content marketing.
Step 5: Focus on your branding
A distinct brand identity will help you attract the right customers to your products. Your market research and competitive analysis data should help you deliver a well-defined brand message.
Market research will show you the main message that will appeal to your target audience, as well as the tone of voice and language you should use to communicate with them.
For example, Octavia Elizabeth , the fine jewelry company, understands that many buyers in its industry are concerned about the environmental impact caused by the mining of gemstones used to produce jewelry.
So the company built its brand message around sustainably sourced jewelry. Its website and social media profiles highlight the company's commitment to working with ethical production partners.
This approach has attracted a loyal customer base, willing to pay more for its products.
This example further confirms the importance of having a unique brand identity: it helps you build a customer base of loyal customers. When buyers feel that a company's principles align with their values, they will continue to purchase from that company.
Step 6: Choose where you will promote your business
When a business is trying to connect to a specific market segment, it is crucial to choose the right platforms to promote the brand.
Your market research will help you with this. It will help you discover which platforms your target customers prefer, how they search for products online, and what type of content will grab their attention.
So, if your target audience is baby boomers who spend more time on Facebook, then it makes sense to focus on this platform. And if they are mostly Gen Z, then your marketing efforts will focus on platforms like TikTok and Instagram.
Step 7: Listen to your customers
At this point, the niche strategy you developed has led to a new product that has captured the attention of a segment of the market and you have begun to build customer loyalty.
Your job doesn't stop there, you need to continue listening to your customers so you can use their feedback to solve problems and improve your product.
Social listening tools like BrandWatch et buffer will help you monitor what people are saying about your brand across all major social platforms.
Advantages and disadvantages of niche strategy
Let's take a minute to now discuss the pros and cons of niche strategy.
Benefits of Niche Strategy
- Less competition : you will have fewer competitors since you will be selling a unique product to a specific audience
- Higher ROI : Your marketing budget will generate more sales for less money since your efforts are focused on the people most likely to buy from you.
- Audio Fidelity : When customers get exactly what they want from a brand, they tend to stay loyal to that company for the long term.
Disadvantages of niche strategy
- Limited room for growth : Since you are selling to a small segment of the market, your business's market potential is limited to that audience.
- New competition : Once you prove the viability of a new business idea, other competitors will come with the intention of stealing your customers and mirroring your success.
Frequently Asked Questions
Is Apple a niche market?
Apple focuses on selling high-end phones to middle- and upper-class buyers who can afford its high prices. The niche dominated by the company represents only 18% of phone sales and yet generates 74% of the sector's profits.
Is Starbucks a niche market?
Starbucks' niche strategy is to focus on middle- and high-income customers who are interested in premium coffee products that they can consume in a peaceful, well-designed space. This strategy has worked well for the company, which currently holds a 37% market share in his sector.
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Conclusion
A niche strategy helps a brand focus its products and marketing efforts on customers most likely to respond to its offerings.
This is a winning strategy that can work for any type of business, large or small. This also ensures the efficient use of your marketing resources.
If you have any questions about the best way to implement a niche strategy for your new business, feel free to reach out to us in the comments section.
