A niche market is a specific, targetable demographic within a broad market. You can have a niche defined by age, location, budget, religion, or any other factor you can imagine. For instance, if you’re a painter you could specialize in industrial buildings or homes and market towards new construction or remodels. While defining your niche does limit your target audience, it does so in a productive way that will maximize your marketing budget by only marketing to consumers that are likely to need your services or products. If you sell pet supplies, “all pet owners” would be a target market that many would pursue. However, what if someone with a potbelly pig comes to your store and you do not carry any products for pigs? This is why niche marketing is so important. A better market may be “dog and cat owners”.
While it can be hard in rural areas to move away from the “something for everyone” mentality, with a new business it is crucial to capitalize on your unique offerings to the area. Too much inventory or too many services will tie up all your finances. If you try to market to everyone, you will have to carry products and have equipment for services that may only be purchased very rarely. With a well-defined niche market, you can be guaranteed that every customer will purchase one of only a few products or services that you have to keep stocked and ready, making inventory or service preparation a simple task.
How do we narrow down a broad market to a niche? Begin by looking at the products or services you offer. What are your strong suits, and where are you lacking? What makes your business valuable? Most importantly, what area of your business do you have a passion for? What makes customers choose small businesses over large chains is the individualism and sincerity. When you have a passion for what you do, that excitement and confidence will be clear to your customers. If there are many businesses in the same market as you, look for an overlooked niche you fill. Maybe you run an auto repair shop, and your competitors don’t work on motorcycles. If you look closely enough, there are always demographics that are ignored.
Learn from your existing customer base! Your customers chose to patron your business for a reason. Look at what your customers value about your products or services and focus in on that. It’s okay to reduce your amount of services or products to define your niche. As you gain a firm grasp on your niche market, you can expand back out into related products once again. Consolidation does not mean you are confined to that narrow niche forever, it is merely a strategy to grow your business with limited risks.