By Henra Mayer.
The word “niche” comes from a French word that means to nest. In the business context it is described as concentrating all marketing efforts on a small but specific and well defined segment of the population. Niches do not ‘exist’ it is ‘created’ by identifying needs and wants that are being addressed poorly or not at all by other firms and developing and delivering goods or services to satisfy them. Often, the identified niche market is willing and able to pay more for the particular good or service not readily available elsewhere, and for this reason servicing such a market can be very profitable.
On a basic level one can think of a niche market as a group of people or customers that share a specific interest or passion. Examples of niche markets could be vintage clothing, a set of golfing accessories or a specific fitness interest.
Deciding to service a niche market can be a good way to grow your business. It may be less competitive and therefore more cost effective, but you should consider several important factors to make sure you stand out.
You need to be specific
What does your target group look like and how does your offering benefit them, how will you reach this group of people and can you convince them of your expertise in providing a solution that works? It is important to clearly define the value you bring and to ensure that you address a real need. You need to provide new value that a specific group of people want and are prepared to pay for.
Be flexible in meeting unique needs
You need to be fresh and innovative in meeting unique needs in a very specific way. It sounds obvious but this is possibly the most difficult part of your positioning and development. A niche market will most probably bring with it the added pressure of expectation around customer flexibility and leave little margin for error. Servicing your niche market can become demanding. Customers will expect you to deliver. Be consistent, be ethical and drive new value.
Do a competitor analyses
You need to know what is on offer elsewhere, how you stack up and what the opportunities are. A niche market may be less competitive but so might be the barriers to entry and if you are no different from the guy next door, what would be the reason for customers to buy from you?
Be Lean – but learn and evolve
Lean start-up methodology is a validated learning procedure applied to developing new solutions and creating new businesses. It focuses on getting customer feedback quickly and often. The process was proposed by Eric Ries in 2011, with the objective to reduce uncertainty in product development. The methodology might fit your particular business and although one needs to take cognisance of not stifling creativity by focusing on speed to market , there can be very little wrong with engaging a potential target market for early insights. You need to test, engage and learn and manage risks early on. A minimum viable product, tested and validated with the eye on new business model development is a great start. In the end learning and growing, speed to market and engaging with experts and stakeholders in your ecosystem will help you to remain relevant. Do this and you are already ahead of most. There are various innovative methodologies and approaches available. Find the one that works for you and keep on learning.
Be at the edge
Know your industry. Keep up with the trends. What is next? As a visionary you might be early in your assumptions about market appetite and with a niche offering you are always more vulnerable. Tougher economic conditions and uncertainty in economic markets require niche businesses to constantly be at the edge of the future. Innovation is a good skill to have. Hone it, be innovative and aware and adapt to keep afloat in difficult times.
Think you have identified a niche market offering that will drive new value? Go for it!