Welcome to the Entrepreneur Weekly. Last week we zoned in on ‘Omnichannel Retailing’, but let’s take a few steps back. Before we retail, we have to know what and where to sell, right? Today the Entrepreneur Weekly will help you understand niche businesses.
First, let’s define what a niche market or business is. In essence, a niche market is a focused, specialised segment of a larger industry. It’s a space where businesses cater to the unique needs, preferences, and demands of a specific group of customers. Niche businesses are those that serve these niche markets by providing tailored products or services.
Benefits of Niche Market – Niche Doesn’t Mean Small Money
But why have a niche if I can cater to several markets all at once? HubSpot says, “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”. Contrary to common misconceptions, niche businesses can be highly profitable. Here’s why:
Niche markets often have fewer competitors, reducing the need for aggressive price competition. Hubspot says, “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”.
A dedicated customer base tends to be more loyal, leading to repeat business and word-of-mouth referrals. 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.
The specialised nature of niche products allows for higher pricing and better profit margins. Less competition gives you more space to price your product for more profits.
How to Know if Niche Business is Best for Your Product
A niche business is definitely not for everyone. But how do you know if your product or business idea is best suited for a niche market? Well, consider these things:
- Passion and Expertise: Does your product or service align with your passion or hobby? Maybe a genuine interest in the niche can fuel your commitment and creativity. If you are big on fitness, you could look to the business of fitness.
- Market Research: Conduct thorough market research to identify underserved or overlooked niches within your industry. Look for gaps and opportunities that your product can fill. Are other people passionate about your prospective niche? Who are these people? These questions and more are what market research will answer.
- Target Audience: Understand your target audience’s pain points, preferences, and behaviours. If your product directly addresses their needs, you’re on the right track.
Trends in Niche Business
The Sustainability Trend
It’s the new in-thing. Statistics say 56% of consumers say they will be more likely to buy from companies that ensure what they do has a positive impact on society. Niche markets are increasingly leaning towards eco-friendly and sustainable products and practices.
Health and Wellness Trend
In 2023, a healthy lifestyle is always trending. More people want to be the best version of themselves. Green juices, morning runs, dieting…it’s all trending. Health-conscious niches, including organic foods and fitness-related products, continue to grow. How can you tap into this niche?
Customers are now in it for convenience. Since Covid-19, several commercial processes have transitioned online due to government restrictions and social distancing measures. Businesses in the food, fashion, industries needed a solution to get orders to their customers. Courier services filled this gap acting as a middle man between the order and delivery point.
Businesses have pivoted to offer delivery or a mobile service option for ease and convenience. Customers need touchless assistance, and often an app is required to support these transactions.
‘Niche’ and Crushing It
While there are countless examples of successful niche businesses, here are some that have made a significant mark:
- Tesla: Revolutionising the niche electric vehicle market with innovative, high-performance electric cars.
2.Dollar Shave Club: Disrupting the shaving industry with a niche subscription-based model for men’s grooming products.
- Airbnb: Transforming the travel and accommodation industry by offering unique, niche stays in private homes.
- Express Fitness: Providing first-world fitness training facility and training programmes.
JBDC Virtual Biz Zone
Join the Jamaica Business Development Corporation’s (JBDC’s) Virtual Biz Zone on October 24, 2023 under the Marketing & Customer Experience Series. The second session under this series Niche vs. Mass: Knowing which is best for your business, will be conducted Keera Walters, Assistant Business Advisory Services Manager at the JBDC. You don’t want to miss this! Register now.