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WHY FINDING A NICHE IS SO
IMPORTANT TO SMALL BUSINESSES
by: Cary Christian
I'm sure you've read a lot of articles in ezines and on websites that talk
about finding a niche. I've talked about it quite a bit myself.
It's considered a given that finding a niche is important, and it's a very
logical concept, but have you ever been shown just what it can mean to you
from a market standpoint?
You've probably moved beyond having your business built on nothing but
affiliate programs and have one or more products of your own. You may even
be a distributor of some quality name brand products. But whatever you sell,
if you're ignoring looking for niches in your market, you're leaving BIG
money on the table.
HOW BIG IS YOUR MARKET?
Depending on who you believe, there are anywhere from 500 million to 1
billion people online and the ranks grow by the thousands on a daily basis.
Some people will tell you that if you can just sell to a tiny fraction of
these hundreds of millions of people you will generate wealth beyond your
wildest dreams.
There are two problems with that scenario that usually are not addressed
when someone makes that statement:
1. Not everyone is in the market for the products you sell; and
2. It does not consider how much competition you have in a given
market.
First of all, the number of users on the Internet isn't the number that is
important. Let's break it down to what IS important: how many of these
people are likely to be interested in your product?
1. 500 million to 1 billion users include fathers, mothers, sons and
daughters in the same household. Assuming the estimates of the number of
people online are somewhat accurate, let's say there are 200 million
households.
2. Of these 200 million households, most are online to track their
stock portfolios, play games, chat with friends, learn new things, explore
their hobbies, and so forth. In other words, the Internet is like TV and
telephones. It's an information and entertainment source. Many of these
people would never consider buying online. Let's assume that 25 percent of
these people would buy online (again, depending on whose information you
believe).
3. You are down to 50 million potential customers for your online
products. If you are selling consumer electronics, DVDs, books, computers,
and most of the other general categories of products that people DO buy
online, you're going to have to compete with very large organizations who
have tremendous buying power, enormous marketing resources, and almost
universal brand and name recognition. If you have a few gazillion dollars
laying around you can probably catch up to them in your lifetime.
4. This leaves you with a very small piece of the pie to fight for.
In fact, I'll go out on a limb and say that you have no chance of surviving
if you are going to compete head-to-head with the behemoths selling commonly
available products.
The truth is, the general market is the wrong market for you every single
time, no matter what you sell. You run a small business. Your ONLY
option is to find a niche.
WHAT HAPPENS WHEN YOU FIND A NICHE?
Now let's take the flipside. You've recognized that selling generally
available consumer items is not where you want to be. You do your research
and find a nice niche in supplying anti-fog sunglasses for golfers that have
specially coated lenses that help them read the greens better. You've tried
them yourself and think they are absolutely fantastic! You can buy them for
$45.00 and sell them for $90.00 and the company will drop ship one pair at a
time for you or will sell you inventory on terms. None of the major golf
retailers are offering this or a similar product yet.
Depending on who you believe, there are about 30 million golfers worldwide
and more than half of them are online. Therefore, you have a potential
market of 15 million individuals. At the moment, you have NO competition for
this product.
Compare that to deciding to sell golf clubs online. Then you would be
competing with the behemoths again and would have little chance of winning
the battle. But remember the old adage "If you can't beat them, join them?"
Put that to work for you.
You see, you've now found a second benefit to serving a niche market. Allow
me to explain.
You're the only company supplying these glasses, so you have an audience of
15 million potential customers. Join the affiliate program of one of the
golf retailing giants and place links on your site. Many people will buy
your glasses and then click your affiliate link to look for other golf
equipment. Now you're putting the giant retailer's trade name, brand
recognition, and marketing power in your corner instead of fighting it.
The niche makes marketing other products easier. You'll develop your own
brand recognition within your niche, and your recommendations of other
products will mean more.
The niche you find might not be as good as the one in this example, but by
virtue of it being a niche, it will still be a one-to-many rather than a
many-to-many relationship which will make it infinitely more profitable.
Additionally, if you make the market, you have the opportunity to dominate
it! YOU will be the behemoth to the next company that wants to sell on your
turf.
And that, both numerically and philosophically, is why you have to find a
niche. Once you look at the numbers it becomes so obvious that this is the
only way to go you'll wonder how anyone can miss it. But they do. All the
time.
Is it easy to find a niche? No, it takes a lot of work combined with a
little creativity, but the payoff can be enormous.
In the very near future I'll cover some specific ways you can go about
finding a niche of your own.
Copyright (c) 2003 |
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