“Niche marketing,” aka “Vertical Marketing,” aka “Program Marketing”. The strategy may be known by a number of names, but it’s really just “smart marketing” when you choose to market into a particular niche. Why? Unless you have a large budget and have the operational power of a large company, marketing your product or service to a mass, undefined target can be difficult, to say the least. However, marketing a well defined product or service to a well defined target audience, makes things more affordable and more controllable from an operational standpoint. It can also be more profitable than your normal method of doing business. Not only that, When you consider the value of your business, a niche orientation can make it a much more attractive target.
So how do you become a niche marketer? What criteria do you use to choose your target audience? How do you select the right product or service that will be your lead into that market, and do you have the right people and collective mindset that will make this a successful venture over the long term. And, I emphasise long term, as niche marketing requires an extra level of patience now that you are so laser focused in your marketing efforts.
As in your normal business operations there are a lot of moving parts to consider. But before we inspect the pieces, I’m going to assume that you’re thinking about niche marketing because although unplanned, you’re already selling a decent amount of your products/services into a particular niche.
Alternately, through keeping a close watch as to how and where your product/service is used, you’ve spotted an opportunity to either be a disruptive force in that market, or, you believe you have a superior, competitive product that represents an opportunity.
Whatever the reason, you have enough belief to start the exploration process.
So now let’s address some of the moving parts:
- The need: you need to be convinced that there is a need for a current or future product/service you are capable of providing. Is this product already in use, who is providing it and at what cost? Can you knock them off by providing a superior product albeit at a better price? You get the picture.
- Your product or service: are you selling this product now? If so, is there already a proven need for it in your prospective target market? Why? Can you talk to these users? Obtain testimonials? Why did they choose your product? Do you have to improve your offering or just position it in a different manner? (See “Positioning” point #6)
- The target market: what market does this product/service fit? Perhaps it fits more than one market? What criteria can you develop so that you can objectively evaluate the target market before you jump in the deep end? Criteria may include:
- Your product/service fit
- At what price and with what types of margins?
- Actual size of potential market
- Market share you need to derive to achieve ROI, and over what time period
- Geographic distribution
- Ability to reach decision maker and how
- Manner in which other products are marketed to this audience
- Credit worthiness
- Longevity of product life – this may be hard to predict but see if you can at least take a run at answering this question as the ramifications of a wrong decision could be great
- Suppliers: does your product/service rely on the support of an outside supply chain, and how reliable is it?
- Internal resources: do you have the resources to support this new effort? Will it be a distraction to their normal job function? Will it be an onerous burden on your human and/or financial resources? Do you need to obtain some outside help to make this new effort work.
- Positioning: How will you “position” your product in the marketplace. Is it a high end commodity…a product/service with extra quality. Can it be sold at a higher price?
- Marketing: What sort of marketing tactics will it take to get this new product moving through the system? Who is the key decision maker on the client side? Can they be reached through emails? Would they talk to a telemarketer and possibly attend a demonstration presenting the attributes of your system and how it can help the client? Should you advertise to create some brand awareness? Do you have the type of budget that will be required to make a dent in the market?
And last, but certainly not least…
- Planning: Have you thought through the numbers? What will it take to achieve an acceptable level of return and over what period of time? What sort of “lifetime value” can you expect what you’ve achieved market penetration. Two, three, four, even five years of return? If you do not have some sort of understanding of these figures, how can you determine what sort of budget you can afford to spend on customer acquisition?
Let me emphasize, these are not the only moving parts to consider, it’s meant only as a start to some more honest thinking. (With respect, us entrepreneurs can become dishonest with ourselves when we believe we have the best idea since…. but we have no proof).
There may also be some other more quirky or personal reasons why you may select a particular target market, but you should get my drift. If you don’t develop a criteria at the outset of your thinking, you’ll be unable to be objective when the time comes to qualify whether this is something you should undertake.
Of course, you also need to evaluate how you are going to obtain the answers to this set of criterion. Conduct full blown market research by employing an agency like intouch? Conduct what I call “armchair research” undertaken by you and your salesforce?
And finally, a note from a well-worn marketer. Remember my marketing adage “test, test, test.” There is no need to jump into this new and exciting opportunity unless it shows promise. How do you prove that out? You test, test and test again, until you are utterly convinced that pressing the “go” button is the correct thing to do.
From one entrepreneur to the next, good luck – and keep on looking over your shoulder until you’ve proven you can make all these moving parts work in synch – and make a profit to boot!