Niche marketing is a powerful marketing strategy. It provides focus, and builds credibility. When you focus on a specific group, you can position yourself as the subject matter expert. This can bring you more leads while protecting your margins.
The challenge is niche marketing requires far more than niche promotion. It requires architecting a specialized business model.
A niche marketing strategy has three pillars: positioning, operations and promotion. It’s like a three-legged stool. If one of the legs is ignored or under-developed the strategy will fail.
What is your niche?
This may be the most obvious part of niche marketing, but selecting your niche is exceedingly important. A common approach of selecting a niche is to examine your customer base, and see where you may have the most customers. “We’ve got 6 clients in construction. We should be the experts for the construction sector.”
That’s short sighted. What happens if that niche is too small? What happens if they’re already well served, and you’ll just be another me-too brand? What happens if that sector doesn’t look for specialty firms?
Evaluate your target markets under several criteria. First and foremost, define and size the market. If it’s too broad, it’s not really a niche. If it’s too small, you will plateau very quickly. At the same time, examine the barriers to entry. If anyone can enter the market, it will be very hard to sustain a competitive advantage. Select niches that require an investment, both in time and dollars, because that will keep others out.
What are the core assets or skills you’ll need to invest in, develop and protect to service your niche market?
Being all things to all people is no way to run a business. It just spreads your resources too thin.
Even Wal-Mart, whose stores carry well over 100,000 sku’s, isn’t a generalist. All of their systems are tuned towards delivering “Everyday Low Prices” for common household items. They sustain their competitive advantage by investing in core assets and skills that deliver on their brand promise.
Your ability to service your niche and create sustained competitive advantage will come from your operations versus marketing. When customers seek out a specialist they have high expectations.
How will I find you?
Promotion is often the starting point for companies, but it’s the last element of the niche marketing strategy. Hold off on proactively promoting until you have a clearly defined niche and have the core assets and skills to serve it. Your reputation and referrals will be delivered through results.
Niche marketing promotions are really straightforward. You don’t need lots of promotions, coupons and “buy-now” campaigns. Rather focus on your expertise and commitment to the niche. You’ll be able to stand out and attract attention by being open, generous and helpful with your expertise. Let your niche experience you, and they’ll seek you out when they’re ready to buy.
Master the Niche
It takes time to stand out and be the go-to provider in a niche. It takes time to build up your expertise and capabilities, and it also takes time to build your reputation.
Make a commitment to your niche market, and invest in it for the long haul. Time is a key barrier to entry. The more you are perceived as the trusted expert and provider, the harder it will be to displace you.