So, what is a niche market?

In a previous post, that you can read here, I talked about dangerous -though widespread- lies about what a niche market is.

The question now then is…

What is a niche market, and what approach should you follow when selecting one?

I’ll first include my definition of a niche, and then I’ll dissect it section by section:

[features_box_yellow width=”75%” + border=”2px”]A niche market is a group of people with a shared and specific need or interest, that differentiates them from others, and that are actively looking for solutions in the market to satisfy that need or interest, with the intention and ability to pay for these solutions.[/features_box_yellow]

Let’s get into each of the critical points of that definition:

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  • A group of people: Never, ever forget that. A niche is not a product, a keyword, or a search engine bot looking for content to index. We’re dealing with human beings, and it’s peopleyou are talking to, or trying to promote your products to.That’s the starting point of everything you should do in a marketing campaign, and if you want it to be successful, you have to plan everything based on someone you are catering to. And that someone has a history, feelings, beliefs, and the ability and willingness to follow you to the end of he world… or ignore you like you never existed.
  • With a shared and specific need or interest that differentiates them from others: This is really the most important aspect of all. Because it’s that need or interest what tights your niche audience together. They have to share a common desire for something.”Baby boomers” are not a niche: a 65 old executive that just retired, extremely wealthy but physically weak after two heart attacks may have very little in common with a 63 years old tourist guide still active, that kept himself in shape, but didn’t make much money and is worried about his retirement funds “going south” due to the financial crisis.

    But people worried about their heart condition after a heart attack may be a niche market, and people worried about their retirement funds may also be. Focusing on a need that differentiates them from the rest of mankind, or even of other members of a broader market, allows you to more effectively craft your message and target your audience.

    I guess everyone wants to “be healthy”, so that doesn’t count as a good niche; “people interested in having a healthy heart” starts getting closer, as it gives you more anchoring points for your messages and allows you to focus your efforts. And “people interested in having a healthy heart by following a balanced diet and doing appropriate exercise” would be an even better niche.

  • That are actively looking for solutions in the market: Focus on the “actively looking” part here. If someone doesn’t know he or she has a problem (for instance, someone unaware of being allergic to peanuts), they are not going to look for solutions to that problem that, for them, doesn’t even exist.And even if they are aware that they may have a problem, or they have a general desire in the back of their minds, they may not be actively looking for solutions; think of smokers that know that smoking may affect their health but are not willing to quit -at least yet-, or people that think they’d love to know how to play the piano but don’t have the time or energy or an interest strong enough to push them to act.

    If you focus on them, you may spend most of your resources trying to convince them that they have to quit smoking, or that they would be fulfilled if they learnt to play the piano, and not make a single sale. Do yourself a favor, and focus on people that are sending you “signals” that they want to quit smoking, or that they want to learn how to play the piano. And those signals can be anything from the queries they enter in search engines, to the groups they are part of in Facebook, LinkedIn etc, to their contributions in other online venues like forums, Q&A sites, etc.

  • With the intention and ability to pay for these solutions: You have to be smart here, and try to determine if your audience, or which segments of your audience, are really willing to open their wallet and spend their hard-earned money in whatever it is you are selling or promoting.If we think of the intention to buy, the nature of the “signals” we talked about before can give you a clue. Someone searching for “free antivirus” or “Photoshop torrent” don’t reveal the same willingness to pay for something than “where can I buy the new iPad” or “what is the best push lawn mower”. And the same applies to the other signals: members of a group or forum called “model train fanatics” are more likely going to spend money than members of a group or forum called “funny kitty pictures”.

    If we think of the ability to pay, we have to think of their demographics. Even though they wanted to, 13 year old girls won’t be able to pay for an e-book on “how to kiss a boy”, and it’s not likely they’re going to ask their parents to buy it for them; people that can’t pay their bills and are bordering foreclosure may spend a few bucks on something that teaches them how to improve their financial situation, but are not likely able to spend thousands of dollars on it, or to spend any kind of money in any other products.

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Why is this definition of a niche better than the ones I talked about in my previous post?

The answer is simple, and two-fold:

  • The first one is related to your mindset: if you think of your niche as a product, or a keyword, you are ignoring the most important factor of the equation: the human mind, and the customer behind your campaign. You are thinking from the seller’s or webmaster’s perspective, and that is likely going to put your focus on the product’s “wonders” instead of on the value it adds to the customer, or on search engine spiders instead of your readers. You are focusing on money, or hits, instead of being thinking of fulfilling a need.
  • And the second one is related to your business strategy and future options: if you think of your niche as a product or a keyword, you are closing yourself in a tight cage; if your campaign works -and it sometimes- does, fine, but otherwise you are trapped and you can’t switch gears and move to a different path. If you are instead focusing on a need a group of people have, you can build an audience, and promote a vast array of products and services to them, and start testing and segmenting, until you find the front-end, up-sell and cross-sell alternatives that offer the best value to your customers, and the best ROI to your company.

So, what are your thoughts? What is a niche in your opinion? Would you add or remove something from my definition?

Please, let me know in the comments below.

Let us know what you think below!