There are two paths for entrepreneurs. You can either serve the mass market or a niche market. Entrepreneurs who serve a mass market usually create many products or serve multiple industries. However, they struggle to become the market leader for each of their offerings. This is different for entrepreneurs in a niche market. These entrepreneurs create specific products or serve specific audiences. Besides allowing you to narrow your scope, serving a niche market helps you gain more credibility and become the go-to brand for your audience. In this post, you’ll learn about the benefits of niche markets, how to find your niche, and what to do after you identify an unmet need. What is a niche market? Benefits of a Niche Market How to Find a Niche Market Niche Market Examples Find Your Lane in a Niche Market A niche market is a focused set of people or businesses who want to purchase a specific offering. Think of niche marketing as the act of specializing in what you provide. When your company offers specific products and services instead of a wide variety of offerings, you benefit by saving money and becoming more productive. You’ll also build a comparative advantage over competitors who are generalists. For example, in the pet industry, there are animals like dogs and cats. Creating a business that sells dog collars is a niche market. The same applies to cat sweaters and pet GPS trackers. When companies decide to sell to a niche market, they attract more customers to their product or service. Let’s look at some benefits of operating in a niche market. Whether you’re starting or scaling a business, niche marketing is an effective way to establish your brand positioning. Here are some other benefits that niche market entrepreneurs enjoy. By focusing on a small audience, you can use your resources to find customers who align with your product. These people need your product the most and are most likely to convert. Niche marketing also helps you save on your marketing and advertising budget. That’s because a highly targeted audience means you’ll have fewer buyer personas. You can spend efficiently, targeting specific types of prospects. Aligning your products or services with a small group of customers is an excellent way to encourage word-of-mouth marketing and positive reviews. This form of social proof is powerful. Recommendations can carry your business into a larger, potentially more profitable market. Mass markets often evolve from niche markets. So while you’re starting small today, consider the big picture, and start building the foundation that’ll help you succeed on a grand scale.
What is a niche market?
Benefits of a Niche Market
Effective Use of Marketing Resources
More Social Proof
Less Competition
Operating in a niche market means you’ll deal with less or no competition. Many companies or individuals like to serve many customers. By going narrow, you’ll offer a specific product that’ll eliminate many companies from your customers’ radar.
That said, there may also be fewer customers looking for your product or service. So you’ll need to enter a niche market that has an adequate audience.
Increased Brand Loyalty
Niche marketing allows individuals and businesses to improve brand loyalty. Engaging with fewer people means you’ll find it easier to nurture prospects and build quality relationships. Your audience will know that you understand their vibe. They’ll see you as a true partner, rather than a vendor who’s only interested in their money.
How to Find a Niche Market
- Reflect on your passions and interests.
- Identify the problems and needs of your customers.
- Research the competition.
- Define your niche and its profitability.
- Test your product or service.
1. Reflect on your passions and interests.
Is there a hobby or skill you're passionate about or good at? Take some time to reflect on those areas of interest as potential niche market ideas.
Below are a few questions to help you brainstorm:
- What skills come naturally to me?
- How do I approach problem-solving?
- What topics do I enjoy learning about?
- How do I enjoy spending my free time?
- Do friends, family, and colleagues request my advice on a specific topic?
Writing your answers to these questions will help you identify your core strengths. This allows you to build on a niche market idea you already love.
2. Identify the problems and needs of your customers.
Now that you have some niche market ideas, think of the problems faced by your target market. Can your passion or interest meet your customer needs? Do you know their motive to buy?
Conducting market research will help you determine the buying behaviors and challenges of customers.
There are a variety of tools (including free ones) for exploring your customer persona. Using them gives you a better idea of how your business can provide value to your niche market.
3. Research the competition.
Before devoting your time and energy to developing a brand-new business, research your potential competitors. You might have a viable product idea, but how many other businesses will you be competing with?
This is where research tools come in handy. Let’s explore some of them.
Exploding Topics
Exploding Topics is an excellent tool that allows entrepreneurs to find emerging trends before they take off. Here’s how it works.
Let’s say you’re interested in the beauty niche. To find emerging trends, you’ll visit explodingtopics.com and use the “All categories” filter. Once you click “Beauty,” you’ll get a result like this.
From there, you can see your competitors in that market and find your own way to shine.
Google Trends
Let’s say “Bakuchiol” from the beauty trends interests you. Acompetitive research tool like Google Trends helps you know how frequently people search for this term.
As you can see below, the interest in the term has been growing steadily since 2017 in the U.S.
With this data, you can get an idea of market size and demand.
Answer the Public
To find a market around your search term, use a tool like Answer The Public to find a niche for different product categories.
For instance, if we enter “Bakuchiol for” in Answer The Public, we’ll see 331 results like bakuchiol for acne, body, blackheads, breastfeeding, skincare, and face.
Each result provides a niche opportunity for you to explore.
Ubersuggest
But before going all-in on any keyword, use a free keyword research tool like Ubersuggest to get a detailed overview of each term.
For instance, when we plug in “bakuchiol for acne,” we see it has a high-paid difficulty and moderate cost per click.
Other tools to use for competitor research are:
Use these tools to explore the best-selling products consumers are researching and see if your new business can meet their needs.
4. Define your niche and its profitability.
If you’re dedicating your resources and time to a new business, it should have the ability to become profitable. Here are a few factors to consider when finalizing the niche you’ll cater to:
- Product quality. Is your product handmade, eco-friendly, or premium?
- Price. Do you want to sell luxury items or will you price them moderately?
- Customer location. Where is your target audience? Are they in a certain country or region?
- Customer values and interests. Are you targeting vegans, environmental enthusiasts, travelers, or sports lovers?
- Customer demographics. Are you selling to straight folks or those in the LGTBQ+ community? What’s their age range, education, and income level?
Your idea could be profitable if you research the market and discover similar products, but few companies sell them.
Look at the price points of competitor products so you can price yours competitively.
Resources like Amazon (for products), G2 (for software), agency directories (for services), and PRICEFY.IO (for price monitoring) are helpful in evaluating competitor pricing and determining prices for your products and services.
5. Test your product or service.
Create a simple website orlanding page for your business so customers can find you. Offer a trial period of the product or give out free samples to your target customers. This initial test period should not cost a large amount of money. However, you can certainly use paid ads to drive traffic to your website.
See if people want to put money towards your product with crowdfunding sites. Not only can you gain funding, but you’ll also get your product in front of potential customers.
If the test is not as successful as you hoped, don’t scrap your idea entirely. Go back to the drawing board and find key areas where you can improve your product or marketing.
If you’re wondering what a niche business looks like, below are seven examples of businesses that cater to niche markets.
Niche Market Examples
- Georgetown Cupcake
- The Container Store
- Drybar
- SoulCycle
- Ties.com
- Dorm Mom
- Kirrin Finch
1. Georgetown Cupcake: A bakery that only bakes cupcakes.
After leaving their corporate jobs, sisters Katherine Kallinis Berman and Sophie Kallinis LaMontagne pursued their passion for baking and opened up Georgetown Cupcake. Unlike other bakeries that create cakes and other sweets, their sole product is cupcakes, and they were able to perfect their recipes by focusing on one product type.
2. The Container Store: A store that only sells containers.
Instead of offering a variety of home products such as furniture, textiles, and artwork, The Container Store focuses on selling compartments — large and small enclosed storage containers where consumers put their stuff.
Sure, customers could go to a convenience store to buy storage, but there’s a good chance they won’t find the exact container that fits the space and aesthetic of their cupboard.
The Container Store fills that void (literally) and the business has turned a healthy profit within this market.
3. Drybar: A hair salon that offers blowouts, no cuts or color.
The market size of the Hair Salon industry in the US was a whopping $48.3 billion in 2022. There’s certainly enough for entrepreneurs who want to provide specific services in this industry. That’s why Drybar only offers blow-drying and styling services. To give customers some variety, the salon offers a few hair-styling options. What sets Drybar apart is its unique concept of focusing on one thing and being the best at it: Blowouts.
4. SoulCycle: A workout studio that only offers indoor cycling classes.
SoulCycle is a 45-minute indoor cycling class that sets itself apart from competitors by only offering one specialized spin class. Other fitness studios don’t compare to the community of dedicated cyclers who spend hours working out at SoulCycle.
5. Ties.com: A clothing store that sells men's accessories.
Global revenue in the men’s apparel market was $499.80 billion in 2022. The US alone had $100.5 billion. This amount proves the gigantic potential of the menswear market, allowing Ties.com to create a niche market that sells specific products.
In the broader market of menswear, Ties.com stands out by only selling accessories like ties, socks, pocket squares, and wallets. Since their products make up a small portion of the menswear industry, they stand out from the competition because they can focus on creating unique, high-quality accessories.
6. Dorm Mom: Laundry service for college students.
According to Grand View Research, the global dry-cleaning and laundry services market size could reach $79.91 billion by 2027. People can easily carve a niche in this industry by providing laundry services for kids, men, women, LGBTQ communities, students, and the list goes on.
Dorm Moms adopted this approach by focusing on a specific audience. Rather than cater to a large population of people in need of laundry service, Dorm Mom serves only college students.
7. Kirrin Finch: A LGBTQ+ clothing brand.
The spending power of the LGBTQ community is about $1 trillion in the U.S. alone. This is an excellent market for brands that stand with this community. The connection is even stronger when LGBTQ founders lead the brand. This is the case for Kirrin Finch, an LGBTQ clothing line.
Led by Kelly and Laura Moffat, Kirrin Finch provides individuals in the LGBTQ community with bespoke suits and button-up shirts for weddings, workwear, or just to look your best any time.
Find Your Lane in a Niche Market
By specializing your products and services in a narrow market, you’ll better use your resources, produce products faster, and develop a loyal customer base. Selling to a niche market can be a short- or long-term strategy — the key is finding your audience and tailoring everything you do just for them.
Editor's note: This post was originally published in October 2018 and has been updated for comprehensiveness.
Topics: Entrepreneurship
