Niche Marketing

Targeting a new niche market can be a low-risk approach to growing a firm's business. In fact, most companies, large and small, direct their marketing to a niche.

Take Hewlett-Packard for example. It markets all-in-one machines - fax, printer and scanner - to home offices and targets larger businesses with higher-priced, single-function machines.

By developing a niche, firms open themselves to untapped, underrepresented resources. Firms offering specialized goods and services that attract a specific group of prospective buyers can potentially be just as lucrative as firms that increase their product line or add locations.

Niche marketing is also cost effective because it enables a company to develop targeted messages. Therefore, if a firm is targeting senior citizens, it can advertise in the local senior magazine or in the senior center newsletter.

Identify Your Niche

A niche market is a narrowly defined group that includes individuals with the same specialized interests and is large enough to produce the volume of business desired.

While researching a firm’s niche, first look at its marketplace and analyze its customers. For example, firms should look at their customers’ income levels, age groups and reasons for choosing a firm’s services.

Fortunately, firms do not need an expensive consultant or survey to acquire this data. All that is necessary is to ask customers and prospects to complete a simple questionnaire or comment card.

If firms prefer an alternative to asking customers and prospects to complete questionnaires, then evaluate existing customers. The key is to uncover a segment of customers with similar characteristics and market accordingly.

Do Your Homework

It is important that firms research their competitors and their products/services. A firm researching its niche needs to know the competition’s unique selling proposition (USP). This way, a firm can determine what it can provide to the niche that is unique and compelling.

The next step is determining the language for the niche market. Determine the niche’s “hot buttons” and communicate with the niche as if you were a member of the group – not an outsider.

Finally, a firm should always test market. Present the end product, whether it is a website, direct mail piece or advertisement, to the target audience. Record their reactions and edit accordingly.

Steven Van Yoder, business marketing expert and author of Get Slightly Famous, analogizes market research as sticking a toe into a lake before jumping in. Firms have to do their homework and planning before making the plunge.

If a firm does its homework and develops effective messaging for its target market, niche marketing can help set a firm apart from its competitors and is a low risk approach to growing its business.