John Deitz
President,
Optimal Enterprise
 
ARTICLE
The Perfect Market Niche
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Several of my clients have asked the question: What constitutes a great market niche?

A market niche is a segment of the greater market that you have exceptional insight into, especially with respect to solving chronic problems or getting an inside track to decision makers. You can develop this insight yourself, or piggyback on the expertise of a partner; but either way, this insight is critical.

A truly great market niche is one that you can influence to the exclusion or weakness of competitors. If a niche is perfectly matched with your products, or already well developed by a channel partner, you can achieve brand dominance and long term sales longevity with a fraction of the effort/cost needed for a "cold" niche.

The problem with isolating the perfect market niche is that marketers do it far too late. They do it after the product requirements (and sometimes the product!) have been developed. Developing a niche late in the process is a common pitfall. Some entrepreneurs are prone to get excited about cool technology or product features, to the exclusion of developing a market strategy. And finding a market to fit a ready product is like looking for a foot to fit a shoe . it can be very hard work.

Timing. The secret of a strong market niche is to research and evaluate niches before the products are conceived. (This also happens to be the secret of a great business start.) If you deeply understand the needs of a well defined demographic (vertical industry, user type, professional role, etc.), you are perfectly positioned to create products that will be readily consumed by that niche. You still have to do the product creative, but that's far easier to do with strong niche influences.

Size matters. Make sure a niche is large enough to sustain your growth or channel plan for a significant period of time. You want to get an equitable business return on the marketing dollar you spend to develop, penetrate and support the niche.

Avoid turf wars. Your ability to protect a niche should be a primary selection factor. Why spend time and precious revenue dollars pursuing a niche that your competition has tied up (unless you have a very specific strategy to unseat them. Confirm that either you or a channel partner

Make a case for it. Take the time to sketch a business case with projections of cost and revenues over time. Document your assumptions about time, cost, prospective revenues, and issues that you expect to face. Assemble a cross functional team and examine the niche plan with them; then integrate their ideas and insights. If you pursue this niche, review your original business case periodically to see which assumptions were good and bad. This is a sure way to improve your business case skills over time.

Bend but don't break. As your plan unfolds, don't be afraid to modify your attack based on current market conditions and real-time intelligence. Just make sure you don't invalidate your original business case. The challenge is not just to garner the niche - it's to do it profitably.

There are literally thousands of potential niche markets out there. Your challenge is to find them, and discover what it is they want, before you even consider what kind of products or information they might buy from you.


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