A niche market is a smaller part of a larger market, made up of people with specific and often unique needs. Businesses that cater to these markets usually concentrate on providing one particular type of product or service.
This focused approach can lead to impressive results. According to a study from May 2013 in Market Intelligence & Planning, companies focusing on niche markets see improvements in profits, prices, sales, growth, market shares, and competitiveness.
However, predicting future growth in these areas, which is crucial for success, is a difficult task.
1.Do Some Early Research
If you want your business to grow, start by finding a niche market — a specific area where there aren’t many products and big companies aren’t paying much attention. The good news is, there are lots of possibilities. According to Harvard Business Review, about two-thirds of customers feel like “companies are not responding fast enough to their changing needs.”
A simple way to discover a niche market that’s likely to grow is by looking at your own needs and those of people around you.
For example, if your mom says her house feels empty since you moved out, she might be part of a group of empty nesters who want personalized home decor. Or, if your gym buddy always complains that his coffee doesn’t fit into his workout routine, he might be part of the group of health-conscious cold-brew lovers.
2. Check the Demand
It’s easier to look into and cater to a market that you really care about. Just make sure it’s not too small for your business to make money. Even if a market doesn’t have a lot of products, it doesn’t mean it will automatically grow. So, it’s important to see if people really want what you’re offering, considering things like how well-known the market is and its overall cycle.
Even if it seems like there isn’t much demand, your business can actually create it. For example, in 2021, a company selling garden furniture found out that, on average, UK households were spending about £670 ($853 US) to make their outdoor spaces nicer. By thinking strategically, they increased their earnings by a whopping 160% and added 450 new products. By doing a similar analysis, your business can create products for a specific market and help shape that market too.
Certainly, what people want can change, so you may need to adjust and offer more things in the future. But keep in mind that you can also strategically make people want your products by offering a variety of things.
3. Dive Deeper into the Market
After finding a market that could grow, the next step is figuring out what kind of product or service it really needs and why those needs aren’t being met already. You can do this by looking at the bigger markets they’re a part of. Here are some ways:
- Check out reports about the industry: These reports should give you details about how big the market is, what influences it, and its potential for growth.
- Talk to potential customers: It takes time, but it’s crucial. Surveys are good, but for more detailed insights, have one-on-one discussions on social media or in person.
- Find out who your competitors are: If a market is already filled with similar products, it might not have much room to grow. On the other hand, even though it might be tempting, a niche market with no competition can also be risky. So, think about expanding or making small changes to stay competitive.
4. Consider External Factors
When considering growth, remember to think about things outside your control that can change what customers want and how much they want it. (We all saw how the Covid-19 pandemic affected businesses, big and small.) Being aware of these changes will help you plan and adjust.
Sometimes, big advancements, especially in technology, can quickly change how businesses operate, so keep an eye on them and figure out how to use them in what you offer.
Another thing to think about is government rules and how they can make businesses follow certain guidelines, affect how much customers trust a business, or even ban a product. Being aware of possible rule changes will help you quickly change what you offer and help customers understand why.
Summary
Focusing on niche markets can help businesses thrive, bringing better profits and competitiveness. Yet, predicting growth is tricky. Early research, understanding demand, exploring the market deeply, and considering external factors are crucial for planning and adapting to changes. It’s about finding what people need and staying flexible.
