As I am writing this article there are 7.517.871.454 people on planet Earth. This number is of course experiencing an exponential rise that has been lasting ever since. Why is this number important? Well, the vast majority of these more-than-7.5 billion people are going to be future consumers. They are going to purchase possessions, services, food, basically, anything there is to buy. Around a half of them are also going to operate in a world wide web system, a fancy name for the Internet. That means that they will have access to a myriad of online shops, blogs, websites etc. A lot of them will be competitive to each other or share the same market. In a mostly digitalized world where competition is massive and the customer base is picky, it is important for businesses to carve themselves a niche!
WHAT EXACTLY IS A NICHE?
Well, um, obviously, a niche is a recess in a wall! Jokes aside, a niche is a specialized market targeted at a specific group of customer or businesses. For example, a vegan restaurant found its niche catering to the culinary needs of vegans. Or, a craftsman and a weaponry enthusiast selling detailed wooden replicas of historical weaponry who found his niche with re-enactors looking for a cheaper option than a metal model or an original piece. The second example I mentioned is exactly what constitutes a good niche – it is extremely specific. It doesn’t even appeal to a general group of people, the re-enactors in this case. It appeals to a group within a group – the re-enactors with a smaller budget. Additionally, his business is based on his skill and passion for woodwork – that makes him authentic in what he does and is also a part of his appeal.
Lynda Falkenstein outlined a five-stage process of evaluating whether a niche is a good one. As she is a niche specialist, it is worth to examine this in detail. A craftsman doing wooden replicas needs to answer these questions to see if his business idea will work:
- Does it take you where you want to go?
- Taking up woodwork full time will be a perfect opportunity to do what he loves and fulfill his passion.
- Does somebody else want it?
- Definitely, there is a lot of re-enactors in need of a more budget version of weapon model!
- His woodwork might also appeal to a younger customer base – a sturdy wooden kid-sized model is definitely a better choice than a cheap plastic toy.
- It is carefully planned?
- The craftsman will need to have all the tools in place as well as a workshop space.
- There will also be a need for a website and online ads in order to spread the word about the business.
- Is it a one-of-a-kind type of business?
- A product done by a skilled and passionate craftsman being an alternative to expensive replicas or hard-to-get authentic item is surely a one-of-a-kind thing!
- Will it grow? Are you going to grow with it?
- To be fair, there are always possibilities for expanding. The supply needs to meet the demand and if the customer base likes the product, there might be need for hiring several employees or renting a larger workshop.
- The craftsman will fulfill his passion for weaponry and woodwork via his business. As his company will grow, he will grow too implementing new techniques or showcasing his product to new potential customers.
WHY DO YOU NEED A NICHE TO SURVIVE
Let’s stick with the craftsman example. He has a very specific product and a defined, narrow customer base. With his product he is able to cater the needs of his customers perfectly. “But”, you could say, “he could be making so much more if he started doing furniture and wooden ornaments as well”! That’s a fair point to be honest, but only to some degree. Keep in mind that the craftsman is passionate about weaponry, not really about interior design. His ideal business would be just that – making wooden replicas. That’s what he will excel at. And I’m not only talking about the craft of carving wood! He will also be able to become a part of the environment, make friends with his customers based on a mutual interest. To put it simply – he will be authentic in what he does. Turning to furniture might bring him more customers, but there are several points to be considered:
– Furniture industry is surely much larger than the wooden replica industry and therefore is likely to be a lot more competitive,
– The craftsman will be doing something he is not passionate about – in the long run, that will turn his passion for woodwork into a much hated chore and might slowly dismantle the business,
– He would be much less likely to make authentic connections with customers as the mutual passion factor will be missing.
In the end, the craftsman is much more better off choosing a long-term solution over a short-term benefit. Producing furniture could be much more profitable, but would also cause a quick burnout – the craftsman would not be fulfilling his passion. Being in the industry just for the money and not for the actual interest in the field would produce a strain of uninventive and boring products, and would make the craftsman miserable in the long run. It would also be much more competitive and not authentic for the craftsman. With production of replicas, he could not only fulfill his passion, but also create an authentic connection with his customers.
Additionally, it is much easier to start off a business in a niche market. The competition in the niche is much less brutal or even sometimes non-existent. That means, it is relatively easy to become a top business in a given field – which would be followed by a strain of customers! In a highly competitive field it would be much harder or even impossible to break the ceiling without spending a small fortune on advertising and marketing practices. Think of a soft drinks industry – creating a Coca-Cola imitation would be pointless. Creating a more fancy Coca-Cola would be in fact less pointless, but still very risky as there are your Fritz Colas and Mio Mio Colas. But a brand of an artisan drink made with natural juices and local ingredients sold at food truck festivals and delicatessen shops would be just right! The price for such a drink could however remain high – not only there is no competition against whom you’d have to lower the prices, but also people will be ready to pay for a product done by local people and with use of natural ingredients. When settling for a niche, think about a product or a field that’s not there yet or about a product that you can upgrade to be an absolute game-changer!
As I said at the beginning of this article, there are more than 7,5 billion people on Earth. Almost half of them are interconnected by the Internet. That means there are loads of possibilities of reaching a customer. The craftsman I used as an example, could find his customer base in USA or Japan, all while being based in Germany! As he is doing what he loves to do and is operating in a very narrow field, the customers who need his product won’t have a difficult time finding him – as he’s one of the few in the industry, he will pop up in Google search much sooner. That’s also good for the craftsman – being in the niche will save him a lot of money and time spent on advertising and marketing just to break through the ice of much more established and bigger firms. Facebook ads are much cheaper and SEO costs are lower. So in fact, it’s a win-win!
The world is “shrinking” and that really helps niche-based businesses. Customers are ready to look for authenticity and passion. They are ready to go the extra mile to get a product with a story behind it. With the omnipresence of the Internet, searching is easy and so is getting your niche business out there!