Most businesses can tell me who their target market is. The word “target” may convey too large an image, whereas the word “niche” is more narrowed and better defined. Selecting a target niche market is a process unto itself, and I believe that a business’s niche market should be redefined at least once every two years. Saying you know who your niche is without a selection process is not a good answer.
To begin with, you want to select a stable niche, one that is not dominated by one or more of your competitors. It should be one in which you know you offer the “leading edge” in your products/services. It also helps if you have centers of influence in your niche market or have some customers in that niche market.
The process I recommend uses a comparison selection process. That requires the selection of a primary and a secondary market which will be considered and compared. A broad target market is difficult to cultivate. An example: a new air-conditioning and heating company told me that their target market was anyone who needed heat or air-conditioning. I challenged them to select a niche market to build their business in. there are many ways to narrow a large target market into a profitable market niche. In this case, we considered location, size of home, neighborhood age, value of home, their suppliers, and their expertise in installation and repair in selecting their niche.
My niche selection process is as follows:
- Select two possible niche markets
- Estimate the potential for your business growth in both niches
- Develop a preliminary marketing plan for each niche
- Estimate your cost for marketing to each niche
- Study the ability to pay for your services/products in each niche
- What is the competition in each niche
Depending upon the product or service that is being offered, other criteria can be added to the selection process. The important thing is having a selection process and then identifying the right niche for your business. Your chances of growing a profitable and sustainable business are greatly improved if the proper niche is selected.
I’m no genius but I’m smart in spots, and I stay around those spots. Warren Buffett
Nick J. Petra CFP call me to see how I can help you grow a profitable and sustainable business.