One way to grow your business is to expand your niche market without losing business focus. That may sound like a contradiction since it does not seem possible to expand a niche, yet maintain focus. However, in this post, we will explore three ways you can do just that.
First, let us understand what a niche market is.
A niche market is a specific market within a larger general market that has specialized needs. It is a subset of the general market, also known as a small segmented market.
Niches do not ‘exist’ but are ‘created’ by identifying needs, wants, and requirements that are being addressed poorly or not at all by other product or service providers.
That is an important characteristic – niches do not ‘exist’ but have to be identified by you.
As a strategy, niche marketing is aimed at being a big fish in a small pond instead of being a small fish in a big pond. It is also known as segmentation and targeting.
Examples of niche market products include the hundreds of cable TV stations as well as thousands of podcasts and websites that target specific audiences of specific interests and tastes. Each audience represents its own niche market.
So, all the podcasts on the Internet form the general market. However, podcasts discussing sports is a niche (subset) of the general podcast market. Podcasts discussing a specific sport such as mixed martial arts is an even more niche market.
Interior decorators can find work in a general market such as in retail. But, Peter Marino found a niche market within the retail industry by designing stores for fashion houses such as Chanel, Christian Dior, and Louis Vuitton. He has designed more high-fashion boutiques in high-fashion capitals than any other architect in the business.
Jonathan Woodward is an illustrator who has found a very specific niche. He is an environmentally friendly wildlife illustrator that uses a cut-paper collage style both with recycled magazines and digitally to create his art. He caters to a highly specialized market that includes creating illustrations for children’s book publishers to zoos to toy manufacturers.
Artist James Niehues’ canvas is the ski trail map, a very niche and different market for a painter. Since 1986, Niehues has created more than 240 different maps for resorts on five continents including Aspen Highlands, Sun Valley, Vail, Whistler Blackcomb, and Big Sky.
If you can build a business for a feasible niche market (can be done) and viable (can be profitable over time), you have a good chance of success.
And, when you succeed in one market, one or more of the following scenarios will occur:
- You reach your maximum commercial potential in the market as it cannot bear you raising your value (and price) any higher.
- You outgrow your market or are overexposed in the market.
- Your success attracts competitions to the market, and it gets too saturated.
- The global economy, technology shifts or domestic market forces change the viability of the niche market.
- Consumer tastes and buying trends evolve, and your current product is not as relevant as before.
The above reasons are why your primary market will evolve and change. At the speed that the world changes around us now, it is almost impossible for you to have a successful sustainable business in the same market forever.
If you are a business owner, leader or entrepreneur, you need to anticipate and take advantage of markets and not wait till you are forced out of your current market.
Of course, the first thing you need to do is to build a sustainable business and focus on one niche market. You need to understand it fully, create value for it, market that value and build your differentiated position & brand in the market. This is the essence of the Marketing Inverted Pyramid that I expound in my book “Evolve, Adapt or Collapse”.
After you have secured a strong position in this niche market and reached the threshold of your commercial potential (maximum earning power), your efforts will switch over to maintaining your position in the niche market.
You can then think about growing your business. Here are three ways you can expand your niche market while maintaining your focus:
EXPAND INTO THE SAME MARKET OUTSIDE YOUR GEOGRAPHICAL LOCATION
This is a natural evolution for many businesses. When you are successful in a niche market in your domestic market, you can expand by offering your products or services in new cities or countries or make target online marketing efforts to foreign markets.
If you sell physical products, you can find distributors in these new markets but focus on the same niche market. Your track record, experience and position in your domestic niche market will logically carry over to a foreign market.
EXPAND INTO OTHER RELATED MARKETS WITHIN YOUR SAME GEOGRAPHICAL LOCATION
In this approach, you stay in your domestic market but make an upward or lateral move to another targeted niche market and start over again. It is essential to note that the markets you move to must either be related (in terms of audience profile) and/ or must have the same perceived value.
For example, if your primary niche market is providing IT hardware to restaurants and hotels, you will probably be less successful in carving a niche in the consumer home IT market. For one, your operations likely are too large and sophisticated for home users. This would likely mean your costs and selling price to customers will be higher than the market can bear. Finally, most consumers will hesitate to contact you in the first place if you have a strong brand servicing large restaurants and hotels.
However, if your primary niche market is IT hardware for restaurants and hotels, it is possible to expand your niche to resorts. All these niche markets fall under the hospitality or tourism sector, and all these businesses service patrons of similar profile.
When you once again secure a strong position in this second niche market and reach your maximum commercial potential, you can repeat the process with another niche market such as convention centres and attractions.
EXPAND INTO OTHER RELATED MARKETS OUTSIDE YOUR GEOGRAPHICAL LOCATION
This is a combination of the first two methods and approaches described above to scale your business.
While the fundamental steps of building your brand in your new market remain the same, each market is different. The business strategy of the Marketing Inverted Pyramid will apply as you identify feasible and viable foreign markets and create value for these markets.
Market conditions, competition, currency exchange, government regulations, language and culture, must be factored in when choosing a niche market, differentiating the product, creating a position, developing marketing tools and determining your price point.
While riches are in niches, it is vital always to maintain your focus as well as ensure consistency in your branding efforts as you expand.