A market niche is defined as a segment or part of the market with its own particularities and characteristics, made up of a public with common interests. In other words, it is a very specific part of the market made up of a small number of people or companies that share similar needs and characteristics. Now we will tell you more so that you can understand it better. Keep reading!
what is a niche market?
In addition to the definition we have just given you, in order to understand what a niche market is, you must take into account the following characteristics that it must fulfil:
- it is a small group of people, companies or brands that are related to the market segment to which they belong.
- it must have a considerable size in order to be profitable, i.e. the number of consumers must be sufficient to provide profitability to the company.
- it must have similar needs and desires, i.e. the public needs, wants or desires similar products or services.
- the audience must be willing to buy those specific products or services, i.e. they must be willing to pay a little more to get their needs met.
- normally, niche markets have few competitors, so that only a few companies are in charge of satisfying their needs.
- the products or services are usually considered premium or exclusive because the demand is not so high.
how to find your niche market?
Now that you have understood what a niche market is and the characteristics it should have, we will proceed to tell you what steps to follow to find your niche market. Attention!
- Find out which market you want to be present in. The first step to find your niche market is to know which market you want to be in. In other words, the main thing is that you are clear about which market you belong to and which subject you dominate. Bear in mind that you have to bet on a business that you like and in which you are an expert, as many failures are caused by betting on a market that you do not know or that is on the rise or that has a large volume of competitors.
- Identify people's interests, needs and problems. Once you have chosen your market, it is time to investigate the needs, problems or interests of the public, as it is important to study what interests the people who are going to be in the niche you want to enter. Through keywords you can get to know in depth the interests of the audience.
- Look at supply and demand. The third step is to look at supply and demand. Remember that your niche market must be based on a real problem, or else you will have no demand from the public and your business will fail.
- Analyse the competition. When we told you about the main characteristics that a niche market should have, we mentioned that it should have few competitors, because if there is too much competition it will be difficult for you to achieve success. When you are looking to enter a niche market, ideally there should be no or very few companies within it. What you are looking for is to cover a need or a problem that was not covered by other brands.
- Focus on a specific audience. A niche market is a very specific segment of the market, so it does not make sense to target a mass audience. At this point you have to create the profile of your buyer persona or ideal customer, who is the one who will buy your products. This profile will define your target audience and all the strategies you carry out will be focused on them.
- Determine your profitability. As a last step you should check if your business is going to be profitable in the near future, for example, if you have already observed that there is a considerable amount of demand then you can consider investing.
2 examples of profitable niche markets
- Pet friendly rural hotel for adults only. The most important economic sector in Spain is tourism. However, there are still untapped profitable niche markets in this sector. The pet friendly urban hotel for adults only is a good example. It is aimed at a very segmented public: adults who want to stay in a hotel in a rural environment without the presence of families with children, but want to be able to take their pets with them. And it also has a very appropriate market size, as more and more households have one or more pets.
- Adventure sports club for singles looking for a partner. There is a hyper-segmentation of people looking for a partner and who love adventure sports, and it is an appropriate size. It is also a type of leisure activity shared by many people and fragments a segment that exists, is profitable and is growing, that of matchmaking companies.