Defining your SMB’s niche marketing strategy
August 21, 2019
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Finding success in small business markets
A large consumer base with plenty of money sounds like every small business owner’s dream. But what many entrepreneurs don’t realize is that large markets attract lots of competition. Many small businesses can’t compete against large corporations with deep pockets and an established brand. They wind up stuck as a small fish trying to make a splash in a big pond.
So what are these tiny fishes to do? It’s simple: reduce the size of the pond. In a smaller, less competitive market, your small business will stand out.
You can’t please everyone, so stop trying. Sometimes it’s better to be the big fish enjoying a small pond.
Narrowing down on niches
What exactly is a niche, anyway? In business, the simplest way of explaining a niche market is to think of it as a subsection of a larger, less defined market. For example, ‘bread’ is a pretty big market. Artisan baked goods is a niche of the larger bread market. Gluten free artisan breads would be an even smaller niche of that market.
Consider the case of Lululemon. Started in 1998, they began serving the niche of women’s yoga wear. They focused on a narrowly defined niche: women’s workout gear specifically designed for yoga lovers. Instead of trying to compete in a crowded market, they owned a smaller and more manageable slice of the athletic wear pie. Now, they bring in 2.65 billion per year, and were influential in sparking the athleisure market (estimated to reach $350 billion globally by 2020).
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The big benefits of staying small
Niche businesses benefit from a specialty type of marketing: niche marketing. Marketing to a niche is much easier than marketing to a wide variety of people, because you likely already have a good idea about what your customers want.
You probably already know your target market’s interests, pain points, preferred media networks, and communication styles. Large marketing campaigns must typically begin with this type of audience research, but you probably already have a good idea of where your potential customers are, what they like, and what they are likely to respond to.
For example, lets say your niche market is a vegan meal box company. You probably don’t need an expensive audience research firm to tell you to focus specifically on media networks targeted towards vegans, social media influencers who promote vegan lifestyles, and trade shows geared towards vegan products. The more narrowly defined your niche is, the easier it is to target individuals within your desired market.
Choosing to target a narrow niche market also allows you to establish your brand presence faster. When you are competing against industry giants (and their deep pockets), it can take years to develop a reputation as an expert in your industry. But niches are much easier to dominate. The smaller the pond, the more likely you are to be the biggest fish.
Let’s look at the crowded market for makeup and beauty products. Establishing yourself as an expert in the makeup space would be difficult, expensive, and time consuming, as you’re pitted against large multinational corporations. But, if you narrow down your target market towards the eco-friendly beauty niche, you can achieve brand awareness and saturation much faster (and with less marketing costs). Niche businesses are easier to position as experts at trade shows, industry coaching, and mentorship programs. After all, it’s much easier to become an expert in a field where there is less competition. If your business is the first to begin offering 100% vegan, eco-friendly makeup in recycled packaging made from dismantled zoos, then boom – you’re immediately the industry expert in reclaimed zoo packaging.
Niche businesses also allow you to maximize your sales potential. Consider the earlier example of eco-friendly makeup. While the total target market is smaller for environmentally responsible beauty products, if you own a large portion of it, you’ll still see larger profits than if you sold to a smaller percentage of a larger market. After all, it’s better to have a larger piece of a smaller pie than a small sliver of a large pie.
Further, niche businesses benefit from higher customer loyalty and retention. Since they are highly specialized, niche products are typically well engineered and have a solid product-market fit. If you’ve created the ultimate gym bag for disc golf lovers, they’re likely to pay a premium for your product. Now, you have a dedicated customer base that you know intimately. Disc golf shoes, t-shirts, and other paraphernalia are easy up-sells.
It’s much cheaper to sell to an existing customer than to onboard a new one. Niche businesses can capitalize on this by focusing on customer retention and care. Keep your niche market happy, and they’ll return to you again and again. Happy customers who feel understood and cared for will pay a premium for the level of attention and service your SMB can provide.
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How to own your niche
Dominating a niche market is all about understanding your customer. As an SMB, you actually have an advantage over large corporations. You probably didn’t just pick a business out of thin air: you’re passionate about your niche. You have personal, lived experience with your customer’s needs, wants, and pain points. Large businesses rarely have this level of in-depth and personal understanding. This experience is invaluable when developing a niche product or service.
So how can you ensure your niche business will become the biggest, baddest fish in your chosen pond? Never stop listening to the people you depend upon: your target market.
Continuously innovate your products based on industry trends and shifting consumer preferences. Actively solicit feedback from customers. Utilize a responsive product design or engineering mindset; it will allow you to adapt to your customer’s preferences. Many startups make the mistake of sacrificing quality for a lower price point: don’t. While not everyone will be willing to pay for your specialized products (and attention), those who do will pay a premium. Remember, you don’t need to appease every customer. You do need to keep your narrowly defined niche customers happy.
Once you’ve built a solid baseline in your niche market, it’s time to utilize the network effect. People with specialized or niche interests likely already know each other (very few people play disc golf alone). This is an extremely effective (not to mention cheap) method of growing your customer base.
Entice your existing customers to spread the word about your business with discounts, coupons, or referral programs. Online rewards programs are an excellent way to capitalize on and grow your global network of customers. Since everyone and their grandmother is online these days, there’s no reason to limit your niche to a specific location. Go global to reach the widest slice of your specific niche. When it comes time to pay and get paid, do your research: international wire transfers can include a wide range of fees.
Remember, the best brand ambassador is a satisfied customer. When someone receives the perfect product and amazing service, they’re going to tell their friends. They’re going to post on social media. They’re going to share your product on niche messaging boards. Boom – you’ve just earned yourself some valuable PR.
Going small has surprisingly large benefits for your SMB. Less competition, focused marketing, and a large brand presence are just a few benefits enjoyed by niche businesses. Remember, when it comes to target markets, bigger isn’t always better. Harness the power of small and own your cozy little pond.
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