A niche market has lots of features that make it profitable. However, these features can also be the cause of headaches in the long term if you are not prepared.
Defining a niche market helps you target customers when creating your product or service. Specifically chasing a niche lets you target a smaller, more specific, and more specialized group of consumers.
The rewards of finding a niche are higher-profit margins. Although you can enjoy good margins, you can also oversupply your niche market quickly and sooner or later find yourself lacking prospects. Profits go down as operating cost on advertising and marketing goes up.
The challenge then becomes to expand your business niche without turning your product or service into a commodity where profit margins are super slim.
The best way to do this is to “multiply” your niches by discovering and developing what are substantially similar or related niches. There are areas where you can market and sell your product or service “as is” or with slight modifications.
In this post, I will share four strategies to try when your niche begins to pay diminishing returns, or when you want to grow your business more quickly.
1. Explore Different Cultural Groups
One of the advantages of doing business in a country like Nigeria is the diversity of our communities. We’ve always been a diverse nation, and we’re getting more so every day. But at the same time, unlike some other countries, we’re pretty successful at incorporating individuals from a wide range of cultural and language backgrounds.
There is a popular phrase used by managers when they wanted something tweaked. They would say they want it “the same, but different.” In other words, they want the same product to appeal to different customer groups.
If you have developed a thriving niche market, there’s a good likelihood you’ll also be able to find similar niche markets among diverse cultural and language groups.
You may have to fashion out marketing strategies and materials that are sensitive to and appeal to the different groups, but you almost certainly won’t have to change your actual product or service all that much.
2. Widen Your Age Appeal
Some products and services can find ready niche markets among a wide variety of age groups. In many cases, this is due to what seems to be a “flattening” of perceived ages. An excellent example of this is the Indomie Noodles, which was readily accepted among children and young adults.
They see an opportunity among the older groups which perceived the small packs as food for the kids. The company later created bigger packages which instantly appeal to the adults and old citizens alike.
This also goes the other way: If your niche is paying attention to a group of adults, going younger may be the answer.
3. Find Other Professions Or Professionals
A proven road to success is to develop a service that can appeal to multiple professions. An example would be a website developer that specializes in real estate websites that can be expanded to create used-car websites. Both typically feature a series of items for sale with several photographs.
However, you can “clone” and tweak your service to cater to a different industry. You can’t send used-car prospects to your real estate website.
While the bulk of your coding would be very similar, the “face” you present to your prospects would be very different. It would probably take a new website, social media identity, and other materials.
4. Go West (Or East, Or North, Or South, Or Overseas), Young Entrepreneur
If you’ve done a great job exploiting a niche market in one location, perhaps the same niche is waiting for you somewhere else.
One of my favorite strategies is to spend some time in a trendsetting area and see what’s hot. The key is to look for a product or service that is successfully selling to a niche market and then take the idea to an area that is a little “behind the curve.”
The flip side of this applies to business owners who currently have the “hot idea” in their home towns. Find similar communities where your niche market likely exists and explore expansion to those areas.
Even industries that are typically considered commodities can sometimes take advantage of this.
For example, small overseas pineapple growers can’t compete with the multinational corporations for the commodity trade, but they can develop niche markets in industrial nations for organically grown pineapples. We’ve seen the same thing in coffee.
Wrap it Up!
By employing some combination of these four strategies, you should be able to grow your business, maintain your profit margins, and not be brought to an eventual screeching halt by the niche market vicious circle.