What is a niche market and how to create oneJun 16, 2023
If someone asks you, ‘what is a niche in marketing?’ do you have an answer? Let’s take a look at niche markets in business terms and how by targeting a small part of a larger audience can benefit your company.
When you form a company, one of the biggest decisions you make is who your audience will be. And this is where niche markets come in. You can choose to offer products and services that will appeal to a vast audience, or you could choose to target a smaller, more specialised audience. That’s how you find a niche market.
The reason people choose niche markets is that getting a piece of the larger product pie is difficult. If lots of companies are targeting the same market, it’s harder to get your slice.
Niche markets target a small niche group of people who are specific in that they like something specialised, definitive and quite extraordinary. By targeting that audience you have a much better chance of success.
Of course, that depends on whether you choose that niche audience carefully and give them exactly what they want.
To start, how do we define the word ‘niche’?
Let’s take a look at ‘niche’ when it’s defining a particular market. It’s talking about people in a specific market or company that require a certain product.
In a niche market, you not only target something specific; you also target a certain price range. You also define the quality of the product, and the people who fit into that market are very important, too. A niche market is a very small part of a larger market that is distinct in every way.
The word is either an adjective or a noun. It comes from the French word ‘niche’ and has a French pronunciation.
According to the dictionary, 'niche' has a number of different meanings. For instance, what is ‘niche’ in ecology terms?. An ecology niche relates to environmental conditions.
It means: ‘matching a species niche to a specific environmental condition’. Simplified, this describes how a particular organism responds to the distribution of resources in a particular environment.
Shopify defines the words ‘niche market’ in company terms as ‘a segment of a larger market that can be defined by its own unique needs, preferences, or identity that makes it different from the market at large.’
It goes on to explain further: ‘For example, within the market for women's shoes are many different segments or niches. Shoes for vegan women occupies a niche market, as would shoes for plus-sized women, shoes for nurses, and shoes for transgendered people. These are all niche markets within the larger market for women’s shoes.’
Every market can be defined by its audience's preferences and needs. If you choose to concentrate on that market, be aware that you're making a very important company decision.
How do you look for a niche market?
To search for a specific niche you need to differentiate it according to the following:
- Price: Is it cheap, moderate, expensive?
- Population statistics: The age, gender, education and income level of individuals.
- Attitudes: This includes the audience's values and interests.
- Quality: Mass-produced, hand-made, bespoke.
- Geographic: Where people are living – country, city, suburb, national or international.
Benefits of a niche market
1. You’ll save money and be more productive
When you narrow down the products or services you’re offering, you’re immediately saving money. And you’re able to be more productive, too. By concentrating on a small, specialised offering you’re catering to a smaller audience – this can give you an advantage over competitors who have a much larger, more generalised offering.
Let’s take the fabric industry, which is our field of expertise. By concentrating on offering more sustainable fabrics and printing methods, maake is catering to a very specific audience – one that is aware of the importance of protecting our planet for future generations. As sustainability is the way forward, we’re making sure that we remain relevant in a very important niche.
We also offer other sustainable offerings that appeal to that niche market. For instance, we have a campaign, the maakelesswaste initiative, where we offer upcycling bags of 2.5, 5kg or 15kg to our customers at no charge (all they have to do is pay for shipping if they don’t collect the bag themselves from our North London factory).
We have also created a charity – you can volunteer if you like by emailing us at [email protected] the subject line: ‘Let’s maake less fabric waste’. You can choose to do as little or as much for the charity as your time permits.
2. Your niche audience will align with your products/services
When you are targeting like-minded individuals, it’s much easier to market your product effectively. This is because they agree with the reasons you created the products or services in the first place, and are very likely to want to use them.
When you are targeting a very specific market, your marketing and advertising can also be very specific, which is more cost-effective. You know that you are reaching your audience with ads and marketing campaigns.
Word-of mouth is very effective with niche marketing, as your small group of customers talk to each other about your products. Personal recommendations are great forms of advertising.
3. You’re likely to have less competitors
Because you’re targeting a small market, you’re not likely to have as much competition as you would if your products/services were generalised. Many companies love to target vast audiences. By choosing a smaller audience, you’re targeting less people, but it’s likely that out of your small audience, many of them will want what you’re offering. However, be aware of just how small your audience is, so that you can have the right expectations.
4. Brand loyalty will be high
Your niche audience is likely to be extremely loyal to your brand, because the product or service meets their specific requirements. This also allows you to build personal relationships with your customers, people who understand your values and see you as a reflection of themselves instead of someone trying to take money from them.
How to create a niche market for your company
Find your niche
- Step 1: What are your passions? Can you transform any of these hobbies or passions into a product?
- Step 2:Define who your audience is. Work out if there enough like-minded people who will love the product as much as you do?
- Step 3: What problems/needs does this audience have? Once you have feedback, can you solve any of these problems or give them what they need?
- Step 4: How many competitors are there in this niche market? Who is the competition and what are their products? How much do their products cost?
- Step 5: Now define exactly what your niche is, what the product is, and how profitable you believe it will be.
- Step 6:At times you will need to test your product or service to see if there is enough interest out there to launch it. To do this, target your existing customers. Email them and offer them the product free, or a special offer of a trial period to try the product or service.
Once you’ve found your niche…
Once you’ve decided on a particular niche market, there’s lots to consider. Sure, you have a competitive advantage by choosing the niche, but now you need to create the product and market it properly so that the audience wants to buy it.
- Work out which product would suit the niche audience you’ve chosen. Come up with an audience that isn’t being targeted, or one that is small enough to target, even if it does have other people targeting it. Consider current trends when choosing a product or service.
- What will that product/service cost the consumer?
- Consider the quality and characteristics of the product.
- How will you position this product in your niche market?
- What marketing tools will you use to advertise the product to your audience?
- Will there be a lot of competition in your niche?
- Where will you sell the product? Will you sell it online, in stores, or both?
Some niche examples
- Menstrual cups
- Cosmetics not tested on animals
- Vegan-friendly leather fabrics (Stella McCartney is a huge fan of these)
- Reusable straws for drinking
What do we now know about niche markets?
There are specific areas and trends that we can follow:
- Sustainability: According to Statistica, “Between 2021 and 2030, the global green technology and sustainability market is forecast to grow.” Back in 2021, the size of this market amounted to roughly 28.5 billion GBP.
- Vegan, eco-friendly and cruelty-free products
- Environmentally friendly, cost-effective products that replace plastic
- Pet owners – there are plenty of options for niche markets in this area
- People travelling on holiday or for the company
- The LGBTQ+ community
- Remote workers – products to keep these company people happy
Interesting facts about niche markets
- Every company has a specific target audience, but within that target audience are various subgroups that could become niche markets with plenty of marketing and retail opportunities.
- For example, the brand Coca Cola has its own niche market: Diet Coke and all of its derivatives are targeting those people who believe in staying healthy, reducing their caffeine and sugar intake, and those who are looking to lose weight.
- McDonalds also appeals to a niche market. Interestingly enough, it doesn't fit into the niche you think it does! Now, this global brand doesn't fall into the 'hamburger' niche! It’s USP (unique selling point, or unique value proposition), is offering the very same menu all over the world at inexpensive prices.
In fact, people use the price of a Big Mac to compare prices in their country to the exchange rate in other countries!
- Let's consider the brand Apple. Believe it or not, this brand is also a niche market, despite the brand making huge profits and strong identity. You see, the Apple iOS smartphone has only 18% of the world market. On the other hand, Android holds 74.4% of the market.
We can help maake your business grow
We want to help you discover your business strength. One of our key focuses is to show other small businesses how to improve their sales and marketing strategies. To do this, you need to be able to identify and benchmark your business’ current performance.
We have devised a questionnaire to help you improve your performance in Sales and Marketing while optimising your operations.
Take our 3-minute questionnaire and discover how to take your business to the next level.
Watch out for more innovative methods and an online course to make your small business grow!
Don't miss a beat!
New articles, tools, and offers delivered to your inbox.
We hate SPAM. We only use your email to deliver you valuable information.