One of the most fundamental things a fledgling business can do to set itself apart from the competition is to cater to a niche market. To do this, a business must focus on a certain segment of society rather than the market as a whole. By doing this, the company can then build specialized knowledge about that niche that will enable it to provide better goods or services to the members of that group. And as it becomes more well known in that particular industry and can successfully define itself as an expert in that particular field, the business has the potential to become the “go-to” source for the good or service that it sells, for the people in that niche.
Niche market providers by nature will most likely never become huge ventures, as the amount of potential customers is smaller than those of businesses which cater to the market as a whole. The rewards, however, can be just as great, as the benefits of specialization can make it easier to become profitable. To get started in this business strategy, the first thing an entrepreneur must do is identify the niche market he or she would like to sell to.
One way to do this is to identify a group that is being ignored by other, more generalized businesses because of various reasons. If a company is selling to other businesses, one group of potential customers may be those that are too small for larger businesses to want to focus on. So in this example, the niche market could be small businesses with less than 25 employees. The key to making this strategy work is most likely a focus on customer service, as many times larger businesses do not provide acceptable service to small businesses that do not provide a lot of revenue.
Another way to identify a niche market is to find a specialty that one is keenly interested in. For example, if one owns a home appliance store and is very interested in environmental causes, he or she could decide to only carry “green” rated appliances that use less energy and water. Thus, a new niche is born – selling to people who are also interested in conservation. The store could be branded as such, and over time, when an environmentalist is interested in purchasing an appliance such as a washing machine, this store will be the first one that comes to mind out of the long list of appliance stores in the area.
Thus, identifying a niche market can be the key to success for a new business. By specializing in a certain segment of the market, one can establish itself as an expert in that field and gain many customers that way. The business owner must be careful, however, to make sure that there aren’t too many other companies that are specializing in that area as well, as too much competition can negate the benefits of specialization. But if successful, this strategy can be a very profitable one for a business.