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If you are currently running or planning to start a business, it is crucial to stand out from the competition so that you can attract more customers to increase your sales and revenue. To achieve this, you will need to target the right audience, identify your business niche and market, and build an effective business strategy.
In this guide, we share the importance of identifying a niche for your business, as well as provide tips and examples on finding a niche market and attracting the right customers.
A target niche market refers to a specific group of people with specific needs that your business can serve. The consumer market can be split into two broad categories: Mass and Niche markets.
Mass markets include a wide range of customers with general needs that many companies can meet. This category consists of a large number of potential buyers, and while the market is generally large, the competition between businesses in these industries is often the highest.
An example of a mass market is the fast-moving consumer goods (FMCG) industry, with products such as soap, shampoo, and detergent. While there is still an opportunity for small businesses to compete in this industry, big players such as Unilever and Procter & Gamble (P&G) have long dominated these markets, creating a high barrier of entry that makes it hard for the newer and smaller businesses to penetrate.
A niche market is a smaller, more focused market that serves the needs of a select set of customers with a particular need or want. Using the earlier example of the FMCG industry, an example of a business niche in this case is Aesop, a company that focuses on a personalised in-store experience that attracts premium lifestyle users looking for “emotional wellness in both their beauty routines and home spaces”.
Since it is a relatively small market, it is easier to target a niche market as it will often have lesser industry competition due to the size and nature of the niche. When done correctly, niche marketing can be an excellent way for entrepreneurs and new enterprises to raise their brand profiles and attract more customers.
By targeting niche markets, companies can focus on a specific group of customers and provide them with good customer service. By keeping in mind the specific requirements and needs of the customers, businesses can improve the quality of their products and this in turn helps build a long-term relationship with them. Microsoft found that 69% of consumers from the US stated that customer service is crucial when it comes to brand loyalty and customer retention.
If companies are able to find and target a niche market, they will stand out as there is less likelihood of having competition from mass market businesses targeting the same market segments or niches. When fewer competitors exist, there will be more time, resources, and opportunities to focus on and excel in one’s business strategies.
Being more focused on a niche market also means having a deeper understanding of your target audience's problems and resonating better with them in your marketing efforts. By offering a solution to their problems through marketing like social media and Pay Per Click advertising, your marketing will be able to stand out in the sea of mediocre and generic marketing that is a common sight in this day and age.
Targeted niche marketing helps businesses lower their marketing costs by only running targeted ads and campaigns that focus on a specific audience. This also equates to understanding the buyers’ personas, a vital aspect of marketing. The time and money spent on marketing would drastically decrease, as businesses are now creating marketing strategies with more intent for their target audience.
Finding a niche market is vital as it will make it easier to sell one’s goods or services to people who are already planning to make a purchase. As opposed to a disinterested customer, an interested consumer will have a higher chance of being converted into a customer. Hence, by focusing on a specific audience and lowering marketing costs, businesses can increase their profit margins, thus ensuring the success of their business.
By focusing on a targeted niche, businesses can establish themselves as market experts and further develop their expertise to build the customers’ trust and loyalty.
Now that we have established the importance of a niche market, the following tips can help you identify, find, and dominate your market.
First, identify your passion and the things you are good at. Once you kickstart your journey in that particular market, you will soon become dedicated to it. Study the various profitable niche markets, to see if you can find one that resonates with your passion and expertise.
The next step is researching the target audience, their needs, and requirements. Conduct surveys and find out what are some problems commonly faced by consumers. Next, analyse them to see if your expertise is a solution to the said problems so that you can meet their needs.
Once you have identified the niche in which you want to start a business in, identify the potential competitors to see if the idea is even profitable and lucrative to begin with. Also, research the different types of niches in business to have a better idea of what potential you might have.
The next step is to finalise your niche, consider your customers’ demographics, their needs and interests, ensure product quality, and control price factors to achieve maximum profits. Some profitability strategies include the expanding of one’s business and removing unprofitable segments of it, and creating a loyalty program to reward recurring customers.
Use different marketing and promotional activities to test the new product or service. Offer trial periods and free samples as promotional incentives to attract new customers and retain the existing ones to increase your loyal customer base.
Starting a new business in New Zealand involves identifying a niche market and following the tips mentioned above to achieve maximum success and profits. Once you have started your new business, it will be crucial to partner with an experienced and efficient logistics company to ensure that your products get delivered to the customers on time in a reliable fashion. In the age of e-commerce, you should also maintain your online presence on various social media platforms to ensure continual engagement with your customers.
DHL Express offers various customised solutions and services through which you can reach local and international customers. Open a DHL Express account with us today to explore our different services and solutions.