Why should a small business stick to a much-significant niche? If doing so, wouldn’t they lose other customers and the gains stimulated by them? This is one of the obligatorily asked questions by everyone who run a small business and in process of finding their actual customers. Let us try to understand the sense behind niche marketing. The ultimate challenge of any business owner in this world is to find their target markets unless their products are such ‘must be used at each home’ and thus there is no need to hunt on who their actual customers are. However when we say ‘target markets’, it seems making a much broader view. If you want to learn the basics about target markets, please read our article on The basic myths behind target markets.
Let’s say you are running a small jewelry shop and producing all kinds of jewels. Now you are targeting everyone who wears jewels and you do not really worry about whether they like gold, or platinum or silver or whatever. Now you decide to focus only on designing gold and right now, you know customers who love wearing gold will only come to you. Later you decide limiting your business with ‘gold wedding rings’ and your shop is also renamed as a gold wedding ring house. So that, only people who are about to marry and love gold will come to your shop. What do you think whether you are losing or gaining? I would say you are gaining and here I have listed the reasons behind.
Think about the cost: earlier, you were focusing at all. Thus, obviously you would have had a greater material cost than you have right now. Also from your material suppliers (gold, silver, and platinum), you would have bought in small quantities. Now you have only one supplier and purchasing from him in a huge quantity. So that, you have better chances of creating better ‘supplier relationship’ and gaining a portion of saving in your purchases.
Think about the varieties: earlier, you would have produced huge variety of rings or whatever jewels. Now you are only focusing on ‘gold wedding rings’ and having an opportunity to produce wide varieties of wedding rings. So that, you can become a specialist in this field.
Customer behavior: Assume yourself as a customer who needs to purchase a wedding ring and what would you do? Will you prefer going for a normal jewel shop or for a wedding ring shop?
Do you now agree that you have better chances with a concentrated niche rather than just targeting everyone in your market coverage area? However, it is not to say a niche will be profitable for all categories of businesses.
See how to make million dollars with your niche
How can you promote your product in your niche
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