What is a Niche?
A niche is a focused, targetable portion of the market. A sub-section of a larger market. Think of it like a funnel. At the top the market is large, but as you drill down to more specialist segments, the number of people involved becomes fewer. The health and fitness market could be viewed as follows,
You may even want to take it one step further and only focus on a particular brand of treadmill.
Businesses that focus on niche markets are addressing needs that are not being met by mainstream markets. As a niche marketer your job is to find untapped, profitable niches, establish yourself as an authority in the niche and provide solutions to the problems and needs of this targeted market.
What Makes a Good Niche Market?
A good niche market has a number of characteristics. The main ones are:
- Profitability. It’s no good entering a niche only to find that there’s no demand for the product. What you’re looking for is a hungry market with high demand, i.e. people willing to pay.
- Sufficient pool of potential customers. If the niche is too small, while each customer may generate a profit, total profits may not be sufficient to build a sustainable business. But we don’t want too many customers, as the profit they could generate may attract the attention of larger, more established suppliers.
- Low competition. If the market is flooded with suppliers, you’ll find it more difficult, and generally more expensive, to attract the attention of your target customer. Furthermore, to convert that prospect to a customer, you may have to offer a higher quality product and/or a lower price, than if you were operating in a less competitive market.
In essence the niche marketer is trying to identify markets with easily accessible customers and no established vendor in the field.
How to Identify Niche Markets
That’s the $64 million question 🙂
Start by identifying a market in which there is strong demand. One way of doing this is to visit online stores of the major retailers such as Amazon and Walmart and look at the best sellers. Another way would be to visit your local newsagent and look at the magazines on sale. A market which has magazines devoted to it, is one that has a significant number of people prepared to pay to pursue their interest.
Once you’ve identified a market you’d like to work in, you need to ensure that it’s profitable. A quick way to do this is to enter your search term in Google and look at the number of paid advertisements which are returned. These are the ads in the shaded box at the top of the screen, and the ads down the right hand side of the page. If you see a lot of them, you’ve found a profitable niche. No one pays to advertise unless they’re making money.
Now you need to find your way into the market. Returning to our example, if I type treadmills into the Google search engine, I see lots of ads, which is great, but over 13 MILLION results have been retrieved. If I set up a website targeting treadmills, the chances of my site being found are next to none. However, if I were to enter Precor treadmills, the number of results retrieved falls to less than 600,000. Again, that’s too much competition, but you can see that as the search term becomes more defined, the volume of competition falls.
Specific search terms are great because they tend to indicate that someone is in buyer mode rather than just interested and gathering information. These search terms are known as long tail keywords, and are generally terms consisting of three or four words. But how exactly do you find out which search terms are being entered and how many people are using these terms?
One way of doing this is to use the Google keyword tool. This allows you to see the number of monthly searches, not only for the term you enter, but also for related terms. The number of monthly searches is an indicator of demand. By optimizing your website around lower searched keyword terms, you’re increasing your chances of being found.
Using Google to help you identify profitable niche markets can be very time consuming. It’s big advantage is that it’s free. However, there are a number of products on the market which help to identify niche markets far quicker and also provide a range of other data to help you both optimize and monetize your site. My favourite is Market Samurai.
Market Samurai is a multi-purpose, multi-platform marketing tool. Split into eight modules, the keyword research module allows you to both enter and drill down on keywords. For each keyword it provides a wealth of information such as estimated traffic, volume of competition and the commercial value of the traffic. Other modules, such as the competition module, allow you to see at a glance key ranking factors. A matrix of the top ten sites in the Google SERPs is displayed, allowing you to see how easy, or otherwise, it would be to rank a new site on page one.
This software provides a wealth of help and allows you to judge the commercial viability of a niche relatively quickly. I wouldn’t be without it and highly recommend it.
Finally, a quick word of warning. Finding profitable niches can take some time, particularly when you first start out. In fact, it can take a hell of a lot of time, even with tools such as Market Samurai. I remember when I first started out it took me days. I was working through Ed Dales 30 Day Challenge, watching videos telling me it would only take me half an hour, when in reality it took me half a week 🙁 If you’re just starting out, don’t get too disheartened. It’s more a question of mindset and knowing where to start. When you’re looking in the right pond, the fish are there. I’m sure you’ll find some.
Over To You: No-one expects people to share their niches, but how easy do you find it to find yours? Is there anything in particular you look for? Do you use keyword tools and if so, which ones?