What is a niche market in business?
In business, a niche (pronounced “neesh”) is a subset of a larger market that targets a specific audience. Each niche has a unifying characteristic that makes it ideal for a specific small business. If you’re trying to become a market leader in a mainstream market, you’ll have to compete with massive corporations.
Finding a niche can allow you to gain market share by focusing on getting a high amount of engagement from a smaller pool of customers. Niches exist in many facets of business, from quality to price range. For example, within the fashion industry, some brands cut costs to provide an affordable product to a wide audience, while others sell their clothes at a higher rate for a more specialized price.
A niche could even be as specific as focusing on selling one type of item, such as a clothing company that specializes in women’s casual jackets. It’s even possible to find a subniche within a larger niche that has already started to grow beyond the boundaries of being small. Many small businesses start marketing themselves carefully in these subniches where the competition is especially small and only later expand beyond them.
Benefits of having a business niche
There are many benefits to opening your business up inside a niche market, including:
- Less competition: When you find a niche to specialize in, you can reduce the amount of direct competition from similar companies. When you advertise a product or service to a niche audience, you have the opportunity to charge a premium on your products for their uniqueness or added value. With fewer direct competitors, you have more freedom over your prices.
- Developing expertise: When you focus on a niche, you can dedicate your time and effort to that subject area and become an expert more quickly and easily, building a reputation for excellence and experience in that field. You can then focus on improving the appeal and quality of your product to satisfy your target customer, instead of trying to please everyone.
- Building community: Niches can also simplify your marketing efforts because customers within a niche often network with others who share their values and interests. You can find customers by searching for hashtags or joining hobby groups on social media. Use common niche-specific search terms on your website, so when your target customer searches online to solve their problem, they can find your business. Niches enable you to build a deeper relationship with your audience, develop brand loyalty and create a reliable source of feedback.
Related:How to Grow Your Business
Examples of popular business niches
There are plenty of niche categories that have a proven market of dedicated consumers. Within a popular business niche, you can narrow your ideal market even further to find inspiration for your company.
Here are some of the top industries for niche businesses and examples of a successful niche in each category:
- Fitness: The exercise and weight loss industry has plentiful niche options due to the combination of the broad appeal to people’s desire to get healthy and the wide range of methods to get fit. One niche in this industry could be for people looking for a luxury-brand, low-impact group workout, such as cycling or yoga. You could also specialize in unique, meditative fitness programs geared for certain cultural subsets, or you can go in the opposite direction and focus on extreme fitness challenges.
- Pets: Pet owners are a popular market that has several potential niches, and you can find them by specializing in numerous types of animals. One niche in the pet services industry might be for dog owners who want durable toys shipped directly to their homes through a subscription service. Another niche with many possible subniches could cater to owners of exotic pets of different kinds and species.
- Beauty: Cosmetics and beauty is a massive industry, and the wide range of people who use beauty products results in nearly infinite opportunities to find a niche. An example of a niche for this market could be consumers who want products that dye their hair without the use of chemicals. You could also focus on vegan-friendly cosmetics, or cater to sourcing makeup products for customers with particularly delicate skin.
How to find a niche for your business
Beforestarting a new business or trying to expand your current startup in new directions, carefully consider how to find a market niche where you can leverage what you already know or do to specialize even further. Finding a niche is largely about research. Follow these steps to find a sustainable place to start with lots of growth potential:
1. Think about your interests
Whether you already have a business or you’re just getting started, narrow your market by brainstorming a list of your interests, passions and life experiences. One of the biggest benefits of operating a niche business is the ability to build a loyal following for the long-term. Pinpointing a service or product that you’re interested in helps you stay motivated and gives you insight into the ideal customer.
2. Consider new trends in your existing market
If you already have a business that’s operating and growing, keep your eyes on new trends and subtrends within your existing market. Some of these might have even more growth potential than the wider market you’re already in.
If you can enter them when these trends are still in a small niche state, starting your product development learning curve early could give you a competitive edge that lasts for a long time.
3. Find a target customer
Once you choose a general market area, consider your ideal customer. Create multiple customer personas that represent the kinds of people who would want to buy your product.
Ask yourself the following questions when brainstorming character profiles of your target customers:
- How old are they?
- What’s their income level?
- What challenges do they face?
- What are their values?
- What are their interests?
4. Look for an unfilled need
Start your research by looking for problems that you can solve. Consider common issues that your target customer might experience, how your company could help resolve each problem and how you can market your products or services to fulfill a unique need and bring in new customers.
Research your competitors and think about the services they don’t offer. Do market research by asking your target customers questions, researching keywords and analyzing common criticisms of other similar products or services. Offering a niche product that solves a specific problem can entice customers to move from your competitors to your business.
It’s possible to succeed in a niche market, even if there are similar businesses within the niche. Changing your price point, offering a higher quality or aligning your company with certain values can fill an additional need for the customer.
5. Seek feedback
Testing your product with your target market can boost success in your niche. Create focus groups with your target market, and consider implementing their feedback in your products and advertising. These adjustments based on real responses can increase your marketing effectiveness because you’re typically able to get a higher conversion rate.
If you already have a blog for your business or can guest post on sites that your target audience reads, you can write articles about the problems and unfilled needs you perceive. The reader response can help you see if there’s any interest or agreement with what you’re proposing.
6. Market to an audience
Once you’ve identified your niche, you can aggressively market to that audience to determine whether the niche is viable. To succeed in a niche market, attract as many customers as possible by dedicating extra time to building customer relationships.
Use targeted advertisements, reach out to influencers within your niche and blog intensely about the frustrations and problems that consumers in your specific niche are experiencing. Then, be sure to explain how your product or service in that same niche is working to solve them.
This will demonstrate your expertise in your niche market. It can also build considerable customer trust if you can funnel readers to your posts.
FAQs about business niches
These frequently asked questions about business niches can help you learn more about how to find your niche:
Is it possible to niche down too far?
Yes, it is. Some niches are too small for sustainable long-term growth or they’re so hard to enter that it’s barely worth the effort. For other niches, the potential customers within them might have unique tendencies that make garnering sales too difficult.
You should take market research steps to ensure that there are enough existing customers in your preferred niche, as well as enough unmet demand. There should also be enough room for profitable long-term growth or at least sustainability.
Should I enter a niche if there are already competitors selling to it?
Yes, you often should. Finding a truly untapped market is very rare and usually very difficult, so the presence of a bit of competition might not be much of a problem. Examine your competitors to see if they’re meeting your customers’ demands as well as you could and determine whether you can still find a competitive edge that gives you dominance in that niche.
Are niches that cater to really difficult customer problems a good idea?
For these niches, it depends. They can either be turned into extraordinarily good markets or fail completely. One of the mantras of the tech world is, “do things that don’t scale”. In essence, this means solving hard problems that don’t scale easily into a sustainable business, and it can be applied to almost any other market. If you succeed, it can give you an enormous competitive edge to grow from.
Niche markets with hard problems might seem empty only because nobody has yet figured out a way to make them work and attract the people who would flood in to buy if someone showed them a solution. If you want to enter a difficult niche, first make sure that solving its main pain point will have a wide benefit to somebody.