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Understanding a Niche Market

Charen Smith

May 02, 2008

Some companies may think they’re focusing on a niche market only to be targeting a much broader audience than they need to.

Why is this a bad thing? After all, a business wants as many customers as possible so shouldn’t they target as broad of an audience as possible?

A specific example that I think can use to answer this question effectively is about a small computer company a friend of mine used to work at. The main software they designed was made to help organize large databases into an easy to use system.

Now, any business that has large databases can make use of this software. There are a lot of businesses out there that have large databases. But they didn’t just try to target everyone with their new software. Instead they chose to focus on only school administrations.

It wasn’t long before they were the primary supplier of software to almost all of the school administrations in a statewide area. They may not be getting business from any of the other companies, but the schools provide them with more than enough revenue.

The reason why their strategy worked so effectively was because they were able to become very focused with their advertising. When it came to color printing they could center all of their ads on why their software was great for handling the exact kind of data schools have to deal with. All of the student names, grades, along with other information, could be effectively organized with their database systems.

When these ads were handed to schools they could immediately see why this software was effective for them to use. A broader ad campaign wouldn’t be able to create those connections in people’s minds.

Another important factor was that few companies were trying to target schools. There are plenty of companies out there with programs designed to help with databases, but none for focusing on the niche market of educators.

So if you combine this lack of competition with education specific advertising you can see why they were able to secure this lucrative market with relative ease.

The same could easily happen with your company if you know what kind of market you need to be focusing on. When you’re using color printing to send out your ads you need to consider what the best focus for them should be.

The larger the group you’re targeting the harder it is to provide detailed reasons why your product is best for them. A niche market allows for very focused and effective advertising.

Ask yourself what group you could be targeting. See how many others are trying to get that group’s business, and how best you could design your advertisements around them. Whoever you picked, that is your real niche market, and the people you should be focusing your attention on.

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