Business

How to Define A Niche For Your Business

Many businesses fail to understand their niche or how it can help them build a strong foundation for their businesses. 

While having a niche is not the be-all and end-all of business, it can help you build a strong foundation for your business. 

This post will examine why having a niche is essential and how you can find your niche.

What Is a Niche?

If you look up “niche” in the Collins dictionary, it is defined as:

“Niche (n): A niche in the market is a specific area of marketing which has its own particular requirements, customers, and products.”

A niche is a segment of a larger market that can be defined by its unique needs, preferences, or identity that makes it different from the market at large.

Or put another way business niche is a specialised or focused area of a broader market that your business serves.

An example of a broad market would be offering website design services to small business owners.  That is not a niche, as it’s way too broad.

Taking the time to niche down, looking at your specialisation, an example of a niche market with the scope of the above example could be:

“I develop bespoke website solutions to help orthodontic implant specialists get more bookings.”.

That’s a niche!

Why Is Defining Niche Important?

Whether your business accidentally already addresses a niche market or you are in an existing saturated market, it is critical to differentiate yourself from the competition.

Your digital marketing strategy relies on being able to talk directly to your ideal customer – the individual who is the most likely to purchase your products or services.

If you’re not dialled in on your niche, then the content you produce will not resonate with anyone, and gone is your chance of converting them into a sales opportunity.

“Success comes because you have found your ecological niche and can flourish by doing your own valuable thing.”

Ted Malloch

Benefits of Identifying a Business Niche

The benefits of identifying a business niche include the following: 

  • Become an expert. When you define your business niche, you have the chance to dominate it and become its go-to expert.
  • Understand your ICA. When you live in and serve your niche, it’s easy to define and create your ideal customer avatar (ICA), their desires and pain points.
  • Save digital marketing costs. When you know exactly who your ideal customer is, your digital marketing efforts will be laser-focused on converting them and them only.  Stop wasting money trying to market to anyone else who won’t buy from you.
  • Grow your business. When you know your goals and have a niche ready to sell into, you can quickly grow your business and scale it up.
  • Niches encourage collaboration. Instead of competing with everyone in a broad market, colleagues in your industry start to collaborate and engage with you and your speciality when you niche down.
  • Increase your profits. If you define a small specialist niche, the supply and demand ratio can allow you to increase your pricing.

How to Define A Niche For Your Business In 5 Easy Steps

Here are my five easy steps to help define a niche for your business.

Step 1: Reflect On Your Passions and Skills

Reflect on what you are passionate about and what you are good at.

There will be a bit of overlap between your passions and skills.

You may be good at playing the harmonica but don’t have the passion for starting a business in that area.

Conversely, you may have a strong passion for saving the environment but lacking in skills to apply that in a business model.

It’s also important to consider which areas you have special skills or experience in. 

Some questions to ask yourself are:

  • What do people regularly tell you you’re good at? 
  • What’s your training or education in? 
  • How do you approach problem-solving?
  • What special skills or knowledge have you developed through your work?
  • What do you enjoy doing?

Finding a business area you’re both knowledgable about and love is the sweet spot for identifying your niche.

Step 2: Identify Customer’s Problems and Desires

There are two main reasons why people buy things. 1) To make themselves feel better and 2) to fix a problem.

Within the business areas you’ve identified in step one, consider what type of people you could help.

These questions may help you.

  • What are common problems they face daily, weekly, monthly and long-term? 
  • What are their short-term and long-term desires and goals?
  • What pain points do they face that you can provide a solution for?
  • What would motivate them enough to buy from you?

Create at least one Ideal Customer Avatar (ICA), which combines your research on potential customers.

Your ICA should include data such as:

  • Gender, age and location
  • Job title, employment history and skills
  • Passions and desires
  • Hobbies and interest
  • Problems and fears
  • Family and living circumstances
  • Income and spending patterns

Knowing your ideal customer will help your digital marketing strategies going forward.

Step 3: Narrow Down Your Niche

This is a crucial step to take, so do not miss this out!

While trying to define a niche, many people will end up with a reasonably broad niche.

Look at your ICA and consider what aspects you could use to further narrow your niche.  

The smaller and more specific your niche, the greater your chance to dominate and profit from it.

“No niche is too small if it’s yours.”

Seth Godin

Step 4: Research Competition and Market

It’s essential to evaluate what your direct competitors are doing in the same space.  

You want to ensure that your ideal customers can differentiate between you and others in the same space.

Ideally, your niche will have some specialisation that competitors don’t.

You must ensure a market for your proposed product or service regardless of the competition.  

There’s no point going to all the effort of putting something together if nobody is there to buy it.

Search for some of the problems, issues and pain points you have identified for your ICA and see if anyone is already offering solutions.

Determine the market size that would consider buying in your niche area.

If you find the market is already saturated, it could indicate that you may have to tweak your niche.

If nothing is coming up in your searches, there are two possible outcomes; 1) there is no market, and people aren’t buying solutions or 2) you have struck a niche gold mine, and you are first-to-market with your idea.

Here are some tools to help you research your niche:

  • Google – of course, preferably in the country your niche is based
  • Google Trends – see what is trending in your location for some inspiration
  • Google Keyword Planner – the popularity of keywords people are searching for
  • Answer The Public – what searches are people performing for specific keywords?

Step 5: Test Your Product or Service

Before you commit to putting the bells and whistles on your product or service, testing your idea is a good idea.

Create a landing page on your website for your business so customers can find what you are offering.

Perhaps offer a substantial discount for the first 10-20 people who sign up or show interest in buying.

Having a handful of people use your product or sample your service will give you the feedback you need to tweak and improve your offer before you scale up or go back to the drawing board.

You can always refund people their money in a worst-case scenario.

Still Can’t Define Your Niche?

After all that effort, if you are still struggling to define your niche, consider what everyone else is offering and try exploring the opposite direction.

“If everybody is doing it one way, there’s a good chance you can find your niche by going exactly in the opposite direction.”

Sam Walton, founder of Walmart.

Sometimes you can find a niche in what others aren’t doing.

Bonus: Go Deeper With Ikigai

If you are looking for more depth of purpose when defining your niche, consider looking into the Japanese Philosophical Perspective called ikigai, pronounced ‘(ee-key-guy)’.

The concept of ikigai evolved from traditional Japanese medicine’s health and wellness principles. 

Japanese medical tradition holds that physical well-being is affected by one’s mental-emotional health and a sense of purpose in life.

Some of the techniques of ikigai can also apply to defining your niche, especially when you are considering its purpose and whether there is a market to buy your product or service.

Take Action

By operating in a narrow specialised niche market, you have a higher chance of becoming the dominant authority expert and increasing your prices.

Once your niche is defined, you can use digital marketing to tailor all your strategies toward your ideal customers.

Have a go defining or redefining your niche using the steps above, and let me know in the comment below how you got on.

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