What is a Niche Business?
Author: Salman Zafar ([email protected])
Published: Monday March 29, 2021
Have you constantly heard the expression, jack of all trades, master of none? This essentially means that a generalist does everything in a refined manner, but a specialist does one thing extremely well. This is especially true when you’re a start-up or a newbie businessman or an entrepreneur.
Positioning yourself as a go-to brand for a particular thing makes you highly successful as compared to the generalists and results in a more focused business. This will ultimately lead to a unique value proposition and better content marketing, compelling specific customers to shout-out, “this thing is for me.”
But before we move on, let’s cast a look at what do “niche businesses” mean?
What exactly is a niche business?
The business niche is a particular, focused, and specialized area of the broader market that your business serves specifically. Finding and pursuing a business niche in the material world differentiates you from other businesses and helps you excel in your sector.
A business niche represents a hole in the current market, where the business’s unique selling proposition (USP) will be appreciated by a select group of customers, sometimes called the targeted audience. However, the target audience must be underserved and have great market potential. You have to target a market segment that has immense potential and low competition to enhance your chances of success.
Finding a niche is helpful for start-ups and private businesses that need to generate streamlined revenue and establish a loyal audience. If you occupy a solid niche, your potential customers look forward to you as an exclusive choice instead of going to the competition. There is a huge chance that you can successfully brand the niche with your presence.
Establishing a business in a niche market allows you to charge higher rates for your products and services because of a lower supply and demand ratio. For those pioneering a creative sector or industry, the market becomes extremely lucrative and they can become market leaders.
What is a niche market?
A niche market is a segment of a larger market defined and specified by its own unique needs, preferences, or identity that makes it different from the market at large.
For example, in the market of women’s shoes, there are different niches or segments. You can occupy a niche for the shoes of vegan women who don’t like shoes made from leather. Other niches include shoes for plus-sized women, transgender people, and sportsmen.
A market niche or business niche can be further divided into different subcategories. This gives further refinement to a niche, and you travel from something generic to something more specific. Some of these subcategories include the following:
- Price (premium, medium, discount)
- Demographics (gender, age, education level, marital status, etc.)
- Quality (luxury, handmade, economic)
- Psychographics (values, attitudes, preferences, etc.)
- Geographic (residency based on urban or rural areas)
Carefully selecting a niche business provides you with the potential to target the needs of a specific audience (consumers or customers) better than competitors who focus on a broad market.
More examples of a successful niche business
In an industry, there can be many niches. If you focus on a specific product that serves the unique needs of a particular group of people, this can be classified as a good niche business idea. For example, if a fabric company tried to focus on an item of professional and wrinkle-free clothing, it could include a large audience of professionals who have to travel frequently. Indubitably, this idea can be fruitful in a short time. It will make sense to arrange a line of wrinkle-free clothes that may be highly valued among business professionals.
A notable example is diapers.com, a diaper delivery service in New Jersey that serves a unique need for parents which many people find reliable. It was a splendid example of a niche business that finally sold to Amazon at a hefty price of $545 million.