8. Niche Markets
Tom Dowd sells central vacuums for residential use. He has a lot of competition from a variety of businesses that also sell burglar alarms, sound systems, and whole-house wiring. But Tom concentrates his marketing efforts on people who would build custom homes over $350,000. or basically people who would be more apt to spend the money on a feature that isn't really a necessity. The difference is that his competition markets to the world with moderate sales. Tom concentrates on a niche market and has 10 installation teams to prove his success at moving central vacuums.
Niche marketing speaks to a target audience. Concentrating on a niche market brings you a number of benefits, including more customers, qualified buyers, repeat business, and better word-of-mouth sales. And the simple reason is that you are generally filling an immediate customer need.
In addition, a niche market enables you to focus your sales message with greater accuracy. THe more narrowly you define your niche, the easier it is to communicate with the interests of the people who are in that marker. A small niche can also insulate you from the competition. A large company won't bother with it because the sales number aren't there, and small companies might simply overlook it - at least until you control it by being the first in the market with your niche.
Kim Gordon has several rules to keep in mind when taking on a new niche:
- Meet the customer's unique needs. The benefits you promise must have special appeal to the market niche. What can you provide that's new and compelling?
- Say the right thing. It is imperative that you speak the customer's language as a person who knows the market from the inside perspective.
- Always test your market. Check out the competition's position and determine how you will compete against them. If there is no competition, that isn't always good. It is possible that others have tried and failed to penetrate the niche. Move slowly and "beta-test" the market to reduce your risks.
It is crucial for a new venture to identify and estimate the size of the niche market in order to determine if sales are large enough to support the business idea. There must be enough target buyers on a frequent enough basis to sustain your year-to-year company sales, expenditures, and profits. In other words, a thumbtack store or a scotch tape outlet are probably not viable niche ideas. But the following are a couple of niches that were large enough to make serious profits.
Swanson's hardware in Vineland, New Jersey, has been around for over fifty years. They have seen many competitors come and go, including the really big guns. But they have survived because of their niche - free, fast delivery. And that's free, fast delivery on any item from a lawn tractor to a handful of bolts - generally within 30 minutes. Great niche!
"Jungle" Jim Bonaminio is the owner, fearless leader and creative spark plug behind one of the largest and unique grocery stores: Jungle Jim' s International Market in Hamilton, Ohio. This notoriously creative entrepreneur built his market from a tiny roadside produce stand into a four-ache food lovers' paradise. Jim's flamboyant management style is tempered by his uncanny common-sense approach to problem solving. This marketing maverick sports a healthy disregard for the status-quo and applies his personal brand of guerrilla tactics to every aspect of his booming successful business. His niche - "Making grocery shopping fun."
