As a small business, having a definition of your niche in the market increases your chances of being successful. This is because marketing to a broad market is very expensive so small businesses simply cannot compete with the budgets of larger competitors.
Business Coaching Insight:
The narrower you go the more people will be prepared to pay for what you offer
So rather than trying to spread your marketing dollars too thinly and being overshadowed by bigger spenders, it makes much more sense to focus your investment on a smaller segment of the market.
A major benefit of pursuing a niche marketing strategy for small businesses is that you are in a much better position to dominate a niche and therefore claim the position of market leader.
This will give you a major competitive advantage.
Our definition of niche is a small segment of customers within a larger market.
Basically it's a corner of the market that you can hopefully dominate.
For example, when The Body Shop launched, it focused on customers who wanted environmentally-conscious cosmetic products (even though this niche has now become a large market itself).
Other examples would include a food retailer targeting organic or vegetarian customers, a financial planner focusing on retirees etc.
Some business owners can be reluctant to 'limit' themselves to a smaller niche but this strategy has many advantages for small businesses.
Advantages of niche marketing:
Disadvantages of niche marketing:
For small businesses there are a lot of very compelling reasons to focus on a niche.
The next step is to identify what potential niche to target.
Start by analyzing the current market and compare identify where all of your competitors sit within it.
You can plot these on a positioning or market segmentation map with two axes that represent the key differentiating factors in the market eg. price vs quality or age vs. social demographic.
Here's a very rough example of how this works using the fast food market.
It's by no means accurate, we've just used our own perceptions just for illustration purposes, but this process shows diagrammatically where the potential gaps are in your market:
The next step is to look inside your business.
Is there some area of your business that you are better at than anyone else in the market? Something that makes you uniquely qualified to deliver it?
Sometimes your niche may well be staring you in the face. Have a look at all the areas of your current business – what is bringing in the money?
Once you’ve got a definition of your niche the next thing to do is decide on a USP (Unique Selling Proposition). This is what really sets you apart from your competition especially if you can make a customer guarantee to support it.
For example, if you're a glazing business you could guarantee to complete jobs within 24 hours. A plumber could have a guaranteed call out time of less than two hours.
A guarantee that appeals to potential customers can skyrocket
your marketing as it distinguishes you clearly from the competition with
a compelling message.
Business Coaching Questions: