Differentiation is a common problem for growing brands.
You want to stand out and attract a community of dedicated customers. However, doing that is easier said than done when there are about 627,000 new businesses opening each year.
With thousands of other organisations just like yours to compete with in the growing marketplace, one of the easiest ways to stand out is to find the right audience. Rather than simply trying to be “everything to everyone,” look at where you can fill an existing gap in the market. Figure out how to find a profitable niche.
Finding a profitable niche means assessing an industry that speaks to you, then searching specifically for a sub-section of consumers who aren’t getting the attention and service they deserve from other “broader” brands.
If you can figure out what your audience needs from your sector, then you can bring something truly unique to your business and develop a tribe of happy customers in the process. So, how do you separate the profitable niche opportunities in your industry from segments that are too narrow to appeal to anyone?
That’s what we’re going to find out.
Finding a profitable niche: Why narrow branding is necessary
Niche marketing isn’t a new concept.
All you need to do is start with a broad idea and dig until you find something specific.
For instance, the brewery industry is a vast place, but when Brewdog was forming, there were only a handful of craft beer houses out there that catered to people who were sick of big corporate brands. Finding a profitable niche is all about looking for something your company can specialize in so that you’re more than just a jack of all trades.
Carving out a space for your organisation in a unique niche is crucial to attracting the attention of dedicated, loyal customers. After all, profitable niche markets aren’t just appealing because they offer something different from big-name brands. These niche offerings also excel because they understand the needs of their audience completely.
The more you can narrow your business offering, the more precise you can get with your user personas. This means it’s possible to create highly personalised sales and marketing strategies that speak to a very specific audience. Eventually, as your business grows, you’ll be able to branch out to new market opportunities too, attracting different customers that connect to your initial user base.
Learning how to choose a profitable niche gives you access to:
- Easier growth opportunities: The smaller your target audience is, the less competition there is for that group. You won’t need to work as hard to prove yourself as “better than the rest.” What’s more, because you’ll understand the audience you’re selling to on a deeper level, you’ll be able to build an affinity with them faster.
- Fewer outgoing expenses: Generally, niche marketing costs a lot less than broader promotional campaigns. Your audience is smaller and easier to target, which means that you don’t need to spend as much testing tactics and marketing campaigns.
- More loyal customers: Finding a profitable niche is all about nurturing a tribe of true believers who love your product and services. These fans make up the heart of your company, helping your organisation to grow and thrive. Your customers will care more about your business because you’ve done more work to get to know them.
- Easier targeting: Once you know how to pick a profitable niche, you’ll be able to get to know your customers inside and out. This makes it much simpler to target the kind of customer you want.
- Thought leadership: Choosing a profitable niche to excel in also means that it’s easier to develop brand recognition for your company. You’ll have a particular specialist focus, which makes you stand out as an expert in your field.
How to choose a profitable niche: Features to look for
One of the first steps any business leader needs to take if they want to succeed today is to figure out how to choose a profitable niche.
Neil Patel’s niche is marketing and business growth. Tony Robbins specializes in personal development, and Suze Orman works in the financial planning niche. There are thousands of industries and sub-sectors out there to explore, whether you’re an individual entrepreneur or an entire business.
Often, the key to finding the right niche is figuring out which market you can bring real value and opportunity too, rather than attempting to spread yourself too thin by operating in multiple markets. Here are just some of the steps involved in finding a profitable niche.
Step 1: Do your research
There’s a lot of homework involved in running an effective business. Figuring out which market is right for your business means assessing the industries that you’re interested in and tracking down the option that appeals most to you.
- What niches do you find yourself dealing with most of the time? What kind of brands are you a customer of, and which areas of their product portfolio appeal to you?
- What are your biggest passions in life? What are you interested in? What are your hobbies, and what do you spend most of your time doing?
- What would your dream business look like? Do you have any specialist interests that you’ve dreamed about building on before?
- What are your current skills? Do you have any previous experiences or specific talents that could potentially help you to build an effective business?
Although it takes more than just passion to find a profitable niche, you’ll find that it’s much easier to turn an idea into a success if you’re excited about your company. Even when you start a business in a niche with the potential to make a lot of cash, you might not be earning much, to begin with. It’s easier to live with a low income and struggle on if you’re doing something you love.
Step 2: Identify real problems that you can solve
The best businesses are built on the back of solutions. In other words, entrepreneurs figure out what kind of problems their customers face every day and find a solution to those issues. One of the easiest ways to find a problem that you can solve is to address the kind of issues that you have to handle as a customer of specific industries.
For instance, maybe you love pizza, but you’re lactose intolerant? There may be other people like you out there, so how can you design a pizza that will let them enjoy their food without being unwell? Some of the ways you can track down problems include:
- Speak to your target audience: Even if you aren’t sure exactly what kind of products you want to sell yet, you’ll probably know the industry you want to be in. Have one-on-one conversations with the people in your area to find out what bothers them each day.
- Check out forums and websites: Sites like Quora and Reddit are an excellent place to research for profitable niche markets. On these forums, people are always looking for solutions to problems. You may be able to find the inspiration you need for a new business.
- Survey your target market: Start building an experimental group of people that you can talk to and gather information from. For instance, you might be able to join groups on LinkedIn, Facebook, and other social media sites. Here, you can launch polls and surveys that give you access to issues in your industry.
Step 3: Compare yourself to the competition
One of the easiest ways to find a gap that you can fill with your new business is to look at what’s already available in a particular niche. Think about who your closest competitors might be if you were to open a company tomorrow and ask yourself what they can offer.
When you’re working on finding a profitable niche, your aim with competitor analysis isn’t just to figure out what you can do better than other people. Instead, you’ll need to focus on what you can do differently from other companies.
For instance, if you’re in the food company, maybe your competitors offer similar meals and snacks to you, but they don’t provide anything for lesser-served members of the community, like people with vegan diets, gluten intolerance and more. Brainstorm the kind of areas you’d like to get involved in, then see whether you can go any deeper. For instance, instead of just deciding you want to sell clothes, ask yourself whether you could sell environmentally-friendly clothes to people with interest in preserving the environment.
Examples of profitable niche markets in 2019
Trying to grow an effective business in the modern world is tough.
It’s even harder when you’re trying to develop a presence for your organisation in a space that’s already filled with competing brands. Although niche branding might mean that you start your company with a smaller pool of customers to tap into, you’ll also be able to boost your chances of success too.
Not sure what a profitable niche would look like?
Here are a few examples to get you started.
1. Lefty’s: The left-hand store
Did you know that 10% of the world’s population is left-handed?
Despite this, it’s notoriously tricky to track down left-handed versions of crucial products like kitchen supplies, scissors, and more in the average store. Lefty’s is a shop based in San Francisco that tailors specifically to left-handed people.
Not only does Lefty’s appeal to a specific community of people, but its choice to focus on a narrow, profitable niche also means that the company excels when it comes to SEO rankings. The company can bid for cheaper keywords on PPC and attract a more specific range of customers.
There are even left-handed gift sets for the lefty in your life.
2. Whole Foods
These days, you probably think of Whole Foods as a huge corporate brand. However, like many other successful businesses, this company started as a niche retailer. When Whole Foods was first starting in the food and beverage industry, it appealed to a sub-section of customers who wanted to live a healthier life with organic foods and high-quality produce.
Of course, now, organic foods have become a lot of a mainstream concept. However, Whole Foods managed to get ahead of the curve by recognising the demand for better health and wellness in the world. Because they knew how to pick a profitable niche, Whole Foods could see the demand ready to burst into the industry, and the company took advantage.
Now, they have an app that gives customers access to exclusive coupons, which helps to grow their tribe. There’s also a great blog designed for foodies on the Whole Foods website, and the brand has a unique social media presence too.
Another example of a profitable niche that started with a simple idea for a narrow audience. Lush is unlike any other cosmetics brand in the world today because it doesn’t just deliver great high-quality products; it provides items that are ethical, natural, and free from cruelty. The brand never tests on animals, and always does its part for the environment.
Lush started as a simple response to the people in the health and beauty community that were sick of buying products tested on defenceless animals. Over time, the business grew an almost cult-like following as the demand for environmentally-friendly products grew.
Today, Lush uses everything from intelligent influencer marketing to quirky copywriting to sell its products. However, at the heart of its success is its loyal community of followers, who continuously advocate the benefits of Lush to their friends and family. As Lush states on their Instagram page: “Here’s to the #LushCommunity, where all are welcome, always.”
How to know if your niche is profitable
If you’ve been doing your homework, and you think you may have found some lucrative niche markets, now’s the time to test your ideas. You might not have narrowed your plan down into a single area, but you probably have some concepts that you feel good about.
Here’s how to find out if a niche is really profitable, or just a passing trend.
1. Find out what’s selling
For a niche to be profitable, it needs to give you something that you can sell. One of the best ways of finding a profitable niche is to see what’s already selling in your chosen industry. A good way to do this is to head onto Amazon and other marketplace websites and see what some of the top products are in your market.
Create a list of items that seem to be continually selling well in your space and ask yourself what you can do to make them more suitable for a specific audience. For instance, if you notice that people are always buying a certain kind of makeup for better coverage, could your business offer different skin shades? Could you adjust the formula to suit specific skin types? If something similar to your flagship product already has a lot of buyers, there’s a good chance your new business will succeed too.
2. Look at what people are searching for
If there’s nothing too similar to your product on the market already, then another way you can find out if a niche is profitable is to look at what people are searching for. For instance, Clickbank is an excellent way to find out what people are searching for in your industry. You can browse through top products and offerings in your category here.
Ideally, you want to find a product that seems to have some interest from the public but doesn’t have a lot of competitors. If you find that there are a lot of people asking for a solution to a problem, but that they can’t find that solution online, then you’ve discovered a potentially profitable niche.
3. Validate your idea on social media
Once you’ve found out what kind of keywords people are searching for online, you can dive deeper into their searches to learn more about possibly profitable niche markets. On social media, people constantly get together to address problems and talk about products in specific industries. You can find groups on Facebook dedicated to products for busy moms, for instance, or groups on LinkedIn for entrepreneurs in search of helpful accounting software.
Checking out specific groups on channels like Facebook, LinkedIn, Quora, and Reddit will help you to collect more useful information about what you need to deliver with your new product. You can also publish questions of your own on these social networks to see if there’s anything you’re missing. For instance, if you’re planning on creating a local bakery that sells gluten-free cupcakes, ask on a local Facebook group if anyone knows where you can find a similar product nearby. This will show you where your competition is.
4. Decide where you’re going to stand out
Even if you’re successful in finding a profitable niche, there’s a chance that someone might have beaten you to the finish line. With that in mind, you’ll still need to figure out what makes you different or better than your competitors.
For example, if you’re selling those gluten-free cupcakes, we mentioned above, but someone else in your area already offers something similar – what’s going to make you special? Do you have a unique tone of voice that you can share in your branding and on your website to make customers fall in love with you? Do you have environmentally-friendly processes that will make you stand-out to the eco-friendly customers in your market?
Try not to focus on using a “cheaper price” as your USP, as this will only work for so long. There’s always a chance that your competitor could lower their price to kick you out of the industry.
5. Put your idea to the test
Finally, once you’ve done all your research, the last step in figuring out how to choose a profitable niche is putting your idea to the test. One of the best ways to do this is to set up a landing page for the pre-sales of a product you’re making. You can also drive traffic to that page through social media, forums, and even paid advertising.
Kick-starter campaigns are constantly launching to show business leaders whether their idea has merit. Even if you don’t get a lot of pre-sales, you can A/B test your strategy to find out whether you need to adjust your messaging and start gathering customers for your future company. Just remember that if you find out that people don’t want or need your new product / service, you need to be willing to adjust.
Just as there are plenty of profitable niche markets out there, there is also a range of companies that just aren’t going to be beneficial too.
Will a profitable niche help your business to grow?
Launching a successful business in a competitive environment is a considerable challenge.
However, you can improve your chances of success by merely finding the right audience to sell to.
The truth is that there are plenty of opportunities out there for companies – even in this cluttered space. All you need to do is make sure that you’re listening to the needs of the underserved customers in your community.
If you can find a sub-sector of your industry that hasn’t been served by existing businesses, or you can track down a way of offering new value to an existing customer base, then you’re on your way to finding a profitable niche.
Get your niche right, and you can begin to build a brand around that space that appeals to a specific group of dedicated and committed customers. Eventually, those consumers will become advocates for your brand, helping you to grow and thrive – even as you begin to move into new segments and spaces.
Are you ready to discover a profitable niche for your brand? Learn more about your marketing, sales, and branding opportunities with the team here at Fabrik!
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