'How come I hadn't thought of that before?'. This is a very common phrase, both in entrepreneurs and in ordinary people. You are reading Twitter on the subway and you see that a young man has set up a business that is bursting the market: an App to sell food that is going to be wasted in shops and restaurants at a cheaper price. That issue has always existed and it's nothing new that people love low prices, not to mention the ethical issue involved. Then, the question arises: 'How did I not think of that?'.
Despite the fact that it seems that everything has already been invented, the truth is that the great structure that the market represents continues to hide secret doors that lead to hidden places and little or nothing exploited. That, precisely, is a niche market. We can define it as a small sector within a market segment that suffers from certain needs that the market has not yet been able to satisfy. Compared to other consumer groups, there is no competition to fight here, so success is more than guaranteed. However, the difficulty is in choosing a market niche and studying it correctly.
Before choosing a market niche: market segmentation
Market, customer or audience segmentation is a technique that performs a division of potential customers into large groupings. In this way, firms can effectively carry out their marketing campaigns, creating messages and custom content for your segments. This segmentation can be used based on different parameters, which serve as a knife to divide the cake and differentiate each segment.
The segmentation criteria, as we have explained, are the variables that a company uses to discriminate against their public within society aim of those people who are not interested.
Geographic segmentation criteria
This criterion, as its name suggests, divides the public based on where they live. This is because each country and each specific site has characteristics that differentiate it. In this way, its inhabitants have specific needs. In Spain, for example, we are differentiated by issues such as the climate, the type of leisure or culture. Thus, the residents of Spain suffer from deficiencies or request certain requirements that these characteristics of the country have created for them. The result is that what works in Spain may not work in England.
However, isn't it true that the climate of the south differs from that of the north? Within the same country, the culture, climate and customs vary according to the region. This is why, in the geographic segmentation criterion, there are different subcategories. These are: continent, country, community, city, region, coastal or inland area, and urban or rural area.
Demographic segmentation criteria
Demographic segmentation criteria are very useful, since they greatly influence in behavior when buying. However, on many occasions they are not enough and must be combined with other criteria of segmentation. For example, a tops company can study that its target audience is women from 20 to 30 years old. However, not all countries wear tops, in some the weather makes it impossible and in another it is even prohibited. Therefore, they should shrink the circle, leaving a small portion of the big cake.
The most used and widespread demographic criteria are age and gender. Sportswear companies, fragrances, home décor, or the publishing world: they all bring out their target audience based on demographic criteria of age and gender.
Regarding age, it is divided into several groups:
- Seniors: the senior are the people of the third age. They are characterized by having a lot of free time to buy and by having a generally good purchasing power. In turn, they are divided into early retirees, grandparents and relatives, late retirees and active retirees. The reason why a different separation of grandparents and relatives is made is because their primary preference is family and they invest a large part of their money in it. The sectors targeted by seniors are travel and leisure and health and wellness.
- Baby Boomers: are those between 1946 and 1964. They accumulate the 70% of world wealth and when buying they are very cautious, spending time looking for information about the products. As for social networks, they are very present in Facebook and WhatsApp.
- Generation X: This is how people born between 65 and 79 are called. They stand out for their stability and are aware of the latest trends. Unlike Baby Boomers, who trust the traditional and are wary of the new, Generation X is drawn to everything that is an innovation.
- Millennials: this group encompasses all those born between 1981 and 1993. They are the first generation that has grown up with the use of technology. Are multi-device, use social networks and occupy more than half of all online shoppers. Its consumption is divided into the sectors of travel and leisure, clothing and technology.
- Generation Z: the great digital natives, the kings of the online world. They shop online, but they also like the ritual of the physical store. Before making any purchase, they research and analyze the product. Finally, what they value most is immediacy.
Psychographic segmentation criteria
They are those related to lifestyle, personality, social class, interests, character, attitudes and hobbies. It is one of the most difficult criteria to classify, but it is also one of the most illuminating. Despite the fact that it implies in-depth work that takes more time, the results are very beneficial when it comes to guiding all the activity of the company. Think that The psychographic criteria are the ones that name your buyer persona. With the others you only get a sketch, a blurred image from which you can intuit something.
Behavioral segmentation criteria
Regarding commercial strategies, these criteria are very revealing, because they will tell you what do consumers want and expect of a product. Among these are: the frequency of purchase or use of the product, the benefits or expected uses, brand loyalty and perceptions and preferences. Despite the fact that before it was practically impossible to solve these questions, Big Data helps a great deal.
How to choose a market niche?
As we explained at the beginning, a market niche is a small, hidden part of a market segment. Within the women between the ages of 20 and 30 that we mentioned before, there is a part of them who are interested in sustainable fashion because they have environmental concerns. That is a niche market.
If you still haven't found yours, we'll explain How to choose a niche market.
When choosing a market niche, review your capabilities
When it comes to doing anything in life, the main thing is to know how to do it and, above all, that you like it. There are many people who decide to undertake by jumping into the void with a business, solely because it has a high probability of success. The technology sector may be on the rise and starting a computer programming company is a good idea, but, Are you passionate about that topic?
You are going to have to work hard day after day and if you don't like your job, it will weigh heavily on you. Besides, you must have knowledge about area, having worked with him before and being a good connoisseur of the subject.
In summary, you must choose a market niche in which you get along easily and that fits your interests.
look for a need
Within that market segment, there are people who have a problem that other companies have failed to listen to. You must open your ears well and be attentive to any movement. Review forums, read the doubts that consumers have, analyze the keywords of your market or even think about your own experiences. Perhaps you have ever searched for information on a very specific topic and have not been able to find what you wanted. At the end of the day, it is about having an entrepreneurial mind that looks at the world like a great possibility of business.
Analyze the demand
There is no use for one person or two to have that problem. Unfortunately, a business implies a lot of work and money to only be able to solve the need of two people. Before jumping without a parachute, check if the demand for the product is real and is sufficient. For this, you can also make use of the keywords of the search engines. Through certain tools, such as SEMrush, you can check the search volume of the words that define your niche.
Check the competition
You have found a topic that you like and that you control, you have identified a gap in the market and you have verified that several people suffer from it. Now is the time to check if there really is no one exploiting that problem.
Ideally, there is no competition. However, in the world we live in this is quite complicated. The important thing is that the competition is not too much, but that you can count it on the fingers of one hand. Once you have identified it, think about how you are going to stand out from it: why consumerssdshould they choose you?
Why is it beneficial to choose a market niche?
Increase in potential customers
Developing a general business that is focused on the majority of the population can be very tempting. However, since your target audience comprises many groups, you will not be able to specialize and, therefore, you will offer a product that many companies have already been in charge of offering. With a market niche, the target audience is reduced, but potential customers increase, since you are providing a specific solution to certain people who have a specific desire.
Increase in the value of your offer
This point is closely related to the previous one. Since your offer supposes the resolution of a problem that had not been taken into account before your arrival, your brand is tremendously valuable for all those people who suffer from this need.
The only opportunity they have to cover this gap is your company, therefore they will be willing to pay a high price for your product or service. On the other hand, if there are multiple products similar to yours, the most normal thing is that the user becomes more demanding and looks for the most competitive price. Thus, the number of sales would be higher in a general market, but the prices would have to be lower.
Easier marketing plan to create
When it comes to defining the wants, tastes and desires of your audience, you will have it much easier. Therefore, the campaigns will be easier to carry out, they will take up less time and give you better results. In the same way, you will know in which networks you must be digitally present, how to communicate with your audience and what should be the content you generate. From the creation of new products to the definition of your editorial line, everything will be less complicated and overwhelming.
Innovation and the highlighting of a need that had not been considered will make the spotlight point towards your brand. In the absence of competition, you will become the authority in the sector, obtaining great notoriety.
In short, a market niche is the place from which, unconsciously or consciously, all successful businesses have started. The victory of a brand is always triggered by an imbalance between supply and demand to which it provides a solution. Find the Achilles heel of the market and put your head.