3 Most Important Factors In Carving Out A Niche Market
Most people would be familiar with the super brands that are dominating the world like Toyota, Microsoft, Boeing, etc. But if you intend to build a business centered around becoming the next global brand, you are bound to failure.
Don’t get me wrong, becoming big can be an ultimate goal or vision for your business. But if you are just starting out, baby steps will give you a much higher chance of success than a huge leap of faith.
Once you attain a certain level of success in your first few steps of driving the business, you can then start dreaming of bigger things.
In this day and age, you can’t compete with the big boys as a start up. Your only chance of success is a business plan that carves out a niche which you can totally devote your attention to.
Big players are too busy serving the mass market to think about niches and market gaps. This is why they more often than not, allow smaller enterprises to dominate small niches without responding.
In other words, niche markets are not worth their time and resources… until you dominate it… which by then will be too late for big players.
We see this happen all the time in the real world.
What usually happens when the big boys realize how big a niche is, which is demonstrated by a smaller players success, they buy out the company and fully acquire it.
For example, in the online world,
- YouTube focused on video hosting for individuals and Google acquired it when YT was getting too big to ignore.
- Tumblr focused on visual blogging instead of the whole internet. Yahoo then bought over it to reach out to that niche of internet users and publishers.
- Skype focused on VOIP free calls to anyone, anywhere in the world. Microsoft can no longer ignore the magnitude of this market and acquired it.
- Instagram focused on the sharing of pictures over social media. Facebook recognized how much of a market share they have won over in so little time and immediately took over it.
These things actually happen more often than most people think. It’s just that many acquisitions and takeovers are not reported in the press.
The point is that you have a better chance of success by clearly identifying and serving a niche market, than to go head to head with industrial juggernauts by going for the masses. Unless you have disruptive intellectual property, failure is a certainty.
So how do you find your niche?
1) Offer a product or service that no one else is offering
Having a totally unique product that the market demands is ideal. This does not meant that you should conceptualize a new product altogether. You can make improvements to existing products so that they can do things that others in the market don’t.
Sometimes, a small change or additional feature can totally take a market by storm. Whereas, newly developed products can end up with little demand from end users.
For example, coffee tables are found in almost every house. But what people really want is a household fixture where items can be placed on top… that does not take up a lot of space. Space constraints are often one of the key factors of buying decisions.
Innovators then designed coffee tables with flaps and extensions so that the coffee table can “transform” into a dining table! This double function makes it more appealing as it saves the homeowner a lot of space as well.
2) Be a specialist
The jack of all trades business can often succeed only by trading in volume. As mentioned earlier, you can’t do that as you will be eaten alive by the big players.
Other than that, being unable to focus on 1 business is spreading yourself too thin. You can’t really delegate everything to a manager if you are a startup.
Consumers, especially those with more buying power, often look for specialists instead of a general merchant.
Specialist are more recognized at the topic they are involved in. And because of this, they are able to garner a higher level of credibility in the minds of consumers regarding the subject on hand.
For example, if you really want a slick design for the packaging of your new products, you are likely to avail the services of a packaging design specialist. You are surely not going to walk into a general design company and ask for their services.
You do this because you are sure that the specialist will have all the information and expertise required for the cutting edge design which you have in mind. A general design, even if it is a larger company, may not be able to serve you to your needs.
3) Serve an unserved market
You would think that with how modern, digital, and global businesses are these days, that there are no more markets left unserved.
That cannot be more wrong.
There will always be market gaps emerging, or have always existed. You job as a budding entrepreneur is to discover them and serve them by offering exactly what they want.
And guess what? These consumers could be positively responsive towards you as they have been neglected by all for so long.
GoPro is a great example of serving an untapped market.
For decades, there have been portable cameras of all kinds all over the market. Yet the big players neglected 1 niche that turned out to be bigger than anyone ever imagined.
It is the niche of point-of-view video cameras for adventure sports. It is a rather simple idea. But players in the industry never felt that it was worth the resources to serve this niche market. GoPro is now the undisputed market leader in this niche and is worth billions of dollars.
No matter how saturated an industry is, there will always be opportunities for you to carve our a niche market for yourself. And if you really know the category inside out, you will have a very good chance of dominating it.