Before you can create a brand, look for a store, and open a business, you need to find a niche. Your niche market is a key target audience whose needs aren't being met. By identifying your niche market, your business can enter the market and take a dominant position in the area.
There are multiple types of niche markets. You may target a national niche and ship your products across the country, or you can have a neighborhood niche by providing something that isn't found in that part of town.
Finding a niche market isn't as easy as it seems. It requires a significant amount of research and unbiased observations. Use these steps to understand how to find a niche market and choose the best option for your business.
1. Identify Your Passions and Interests
Your niche market starts with you. If you're not passionate about what you are selling and who you are marketing to, then your business is doomed to fail. Create a list of your interests, passions, and skills. Then consider how you could use these skills to target a specific niche.
For example, if you have marketing expertise and a passion for helping animals, you can build a business supporting local shelters or even global conservation awareness. Your skills drive your passion.
2. Identify Problems You Could Solve
The next step in finding a niche market is to identify problems and needs that aren't being met. For example, do residents in your area have a hard time finding fresh produce? Is a food market missing? Do local residents need quality health care?
By finding problems and applying solutions, you have a greater chance of meeting your target audience's needs. Some small business owners make the mistake of taking a great idea and expecting their market to love it.
However, if the problem is already solved or being solved by another company, then your market won't respond.
This is exactly what happened to the ill-fated Juicero, which was an expensive machine that squeezed juice packets. The problem wasn't there or was already met by actual juicers.
3. Survey Your Target Market
A big part of developing a niche market is customer research. Several great niche ideas have gone awry because the business owner didn't understand the target market and its needs. For example, you might find a need in the community and have a solution to fill it, but if your marketing message is tone-deaf or your prices are outside of what customers can afford, then your business won't succeed.
Use various forms of research to understand your market. You can collect direct first-person research from surveys and interviews while also reviewing demographic studies and third-party insights.
4. Research Your Competitors
Another part of your niche research needs to focus on your competitors. Business owners are sharp. They can quickly find profitable niche markets and invest in them within a few months. You may discover that the market is more competitive than you realized.
Use your research to understand your competitors' strengths and weaknesses. What are they doing right that you can mimic? Where are they missing the market that you can improve upon?
5. Offer a Unique and Marketable Product or Service
Once you understand your market and your competitors, you can start to develop a product or service that addresses the problem. Consider the cost of materials to create a product and the amount of time it will take to manufacture them. Determine the amount of labor you will need. Your product needs to solve the problem completely while still helping you turn a profit.
6. Determine the Profitability of Your Niche
By now, your business model should be coming together. You should have an understanding of your small business niche, your target audience's needs, your competitors, and your product or service. From here, you can get into the finances of your business model. See how profitable your business would be and where you would need to price your services within the market. You can even hire a financial consultant to look over your expected expenses and growth plan to see if it is realistic.
7. Test Your Idea
The final step in determining how to find a niche market is to test it out. There are many ways to do this. Some restaurants start out with pop-up shops to introduce their brands and drum up excitement. The rental costs are lower, and the food production costs are low, allowing business owners to test their ideas and make adjustments early on. Once their audience grows, the restaurant will move to a more permanent brick-and-mortar space.
You can make your test as long or short as you want. You can send products to a handful of tests to get reviews and feedback or set up a soft launch of your business and make adjustments as you go. You have done your research and found a solution to your niche. Now the success lies in your ability to run the business you started.
Take Your Time Finding Your Niche
You might think you have a strong target audience you can market to, but that doesn't mean you should rush through the research process. Many business owners jump on a trending niche without truly understanding the market. As a result, their message misses the mark because they don't really know what customers want or need.
Additionally, some business owners choose a fad instead of a reliable target audience for their brand. Fads come and go, leaving these business owners with outdated products no one wants.
If you want to build longevity in your business and win customers over for years, then take time to evaluate your niche and understand the market thoroughly before jumping in.
Once you understand how to find a niche market, you can grow your brand to reach different audiences across your area. You can learn about your customers and really connect with them — providing value other companies don't. This can drive more long-term success than any fad or assumptions made about a body of customers.