Researching New Niche Sectors Within Your Company’s Marketplace
There are three main ways a company can expand. They can take a larger market share; they can move into new markets or they can drill down into their existing market and look for niche sectors. This article looks at the third of these options.
Is there a lucrative corner of your marketplace that is yet to be tapped? Or is your team so specialized in certain skills or processes they could easily dominate other companies in an existing niche sector?
There is only one way to find out: conduct effective research into those niches. This article looks at the advantages of researching niche sectors, the importance of keeping profitability top of mind, and how you can conduct the research process.
The advantages of researching niche sectors
Why are niche sectors so appealing to many businesses?
One key reason is it enables a business to carve out a unique market position and identity. It is much easier to create a distinct and powerful presence within a niche sector than within a broader market, especially where that market contains big players with huge advertising budgets.
By operating within a niche, you can quickly become an industry thought leader. By releasing informative articles, videos, podcasts and other valuable content you will soon grow the reputation of your brand.
The intimacy of a niche sector business can also improve company culture as you unite around a shared passion and focus. As time goes on and new employees join your team, this culture can be developed and refined further, increasing employee engagement and reducing expensive turnover.
Researching new opportunities is also a good habit to get into as it keeps your company agile and alert to changes in the marketplace.
Keeping profitability top of mind
Uniqueness, brand reputation, industry thought leadership, improved culture, and market awareness are all paths towards increased profitability, but they are also potential diversions from that goal.
To ensure your excitement for a niche sector doesn’t cloud your business acumen, it is important to view everything through the profitability lens.
After all, you are not just looking to see if there are exciting niche sectors to get involved in. You are specifically targeting profitable niche sectors. As long as you keep the numbers in keen focus throughout your research, you will be in a good position to make a wise decision at the end.
How to research new niche sectors
How do you go about researching niche sectors? Where do you start?
A good place is to assess your own interests and the strengths of your team. Enthusiasm for a new niche sector will provide the fuel to get things off the ground while playing to your teams’ strengths will make the learning curve shallower and reduce the need to hire new staff.
Some powerful niche sectors arise from combining elements within the existing market. Perhaps the most revolutionary example of modern times is the smartphone. In 1992, IBM decided to meld the functions of a cell phone with a PC to create the Simon Personal Communicator. Now, over 25 years’ later, what was once a niche sector is now responsible for over $1.5 billion in global sales (and that’s just the smartphones themselves).
Creating or dominating a niche is fine, but you will need to have a market for it. Your existing customers can be a mine of information here. Look through survey responses, complaints, and feedback forms for any patterns. These can indicate gaps in the market. Could you be the business to fill them?
Look further afield at social media sites and online forums. What topics are trending? What problems are people experiencing? What solutions are they begging for?
You will also need to research your competitors. Are they planning to move into a niche sector? Read their press releases and blog posts. Are they already up and running? If so, what is their price point? Can you undercut them or offer added value?
Once you are convinced there is a profitable niche sector you could move into, it’s time to create your value proposition and carry out some initial testing. A limited online ad campaign (e.g. using Facebook Ads or Google AdWords) can be invaluable in helping you reach out to your target market and test the waters.
If the test goes well, congratulations! You can now move confidently into your new niche and recruit the frontline staff and senior strategists you will need to dominate it.
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