In strategic marketing “speak”, who earns more money? A general practitioner or a specialist physician such as an ophthalmologist? The latter has spent additional years studying with an emphasis on one particular area of practice which makes him or her both scarce and sought after in his or her profession. The same goes for an organization that has spent years studying the market with emphasis on doing one thing, but one thing extremely well. This automatically justifies higher fees translating to improved earnings. How does a saddle maker to the horse and carriage trade reposition itself to maximize its know-how in leather goods to now command $4,500 for a simple briefcase? Or even hawk silk scarves at $400? Think Hermes.
The answer lies in specialization, craftsmanship, and branding. As with all other specialized professions, a business that, chooses to concentrate on a particular market segment should simply be generating higher revenues. Alternatively, if you join the herd of the mainstream, there is always a vast consumer audience to tap. Profit is driven by volumes. It is harder to compete on price to the point of being perceived as offering a commodity with little or no differentiation — otherwise known as a “unique selling proposition” (USP). The only exception to that rule is when an enterprise keeps churning out innovative, “must-have” items ahead of its competition. Yet that requires constant creativity, refinements, and a considerable amount of R&D. Apple is an example of a brand that has managed to hit both objectives. Not bad for an enterprise, that started life in a garage.
Defining the term “Niche”
Strategically, niche marketing is the way to go forward. However, you ought to be on top of the game. Recently, the firm Kusmi Tea has managed to put all the right elements together in an unbeatable combination. It personifies mass marketing and branding. If you have a specific group of people interested in “organic tea”, you have your proverbial niche. Whether promoting niche products, in focused markets, such as those for vegans, cruises exclusively for “cougars and cubs” or geared for ultra-high net worth individuals, the activities applied to attract that refined target undoubtedly calls for creative strategic thinking.
Targeted Audiences
The best way to start is to define your target audience. An 18-year-old girl who wants to lose weight to fit into her dress is interested in weight loss diets. Hit her at her waistline, and the target is captured with simplicity.
The family who just purchased a puppy wants it trained and therefore requires the appropriate service. Show you can make a dog shake, rattle, and roll and still act well-behaved in the company of others and you will no longer need to flog dog whistles. Ever notice how a 50-year-old lady wants to hide her wrinkles and is always searching for a miracle formula to make her wrinkles disappear in minutes? Open Vogue and see how this “class act” can be achieved. These cited groups above represent finely honed targeted audiences. Marketing to such audiences and building an emotional bridge from the intention to purchase decision always attracts higher conversions. You don’t need to recreate the wheel. All you need to do is to find a suitable product that your target audience is looking for and present it on a silver platter. All target audiences liked to be addressed with intimacy and personal contact.
Driving the Niche
Common sense tells you that driving a selected audience is efficient and lucrative.
The following key index shows how niche marketing should be your chosen business strategy:
1. When entering a new niche market, generally you will not have much competition to deal with. This is justification alone for choosing a specific market in the first place. It also makes your SEO (Search Engine Optimization) Internet marketing strategy focused and cost-effective.
2. Niche markets appeal to target customers, and they are generally much more willing to spend money when their specific needs are met. This means that by catering to a specific target market, you can generally earn a better profit margin.
3. Some niche markets contain sub-groups of the main niche. For example, acai berry weight loss pills or natural weight loss diets are sub-niches from the weight loss niche. Despite their relatively small size, they are actually quite sought after. Identifying this need spares you from having to compete with similar businesses. People who fit this profile will seriously consider your product — especially if it offers them a genuine solution.
4. Niche marketing makes it possible to focus on becoming a true expert within a particular realm while building a reputable brand name. Strategically, it is also more focused and easier to segment and attack.
The “Ideal” Niche Player
A niche market player is very effective at working closely with customers to build and maintain long-term relationships by innovating and challenging the existing norms in the industry, thus adding value to the project, program, and organizational level. If one is considered an expert in what one does by focusing on one area, then great success will follow. The value proposition must be relevant to the target market.
This means a target market must be clearly defined. Focusing on a specific market requires knowing it inside and out. This includes conducting a market analysis, stating a precise target market description and goal, as well as being clear about the type of relationship one would like to achieve with his/her market.
By definition, then, a business that focuses on a niche market is supplying a need for a product or service that is not being met by mainstream providers. As such, one can think of a niche market as a narrowly defined group of potential clients offering them the best of what you have. In return, their vendors will profit from higher margins and customer loyalty. As for targeting smaller “sub” niches, you will find them much easier to dominate.
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Unconventional Business Wisdom for the refined entrepreneurial mindset - by James D. Roumeliotis 