Frequently, people do not always know that they have a problem until they meet someone or something that provides a solution to that problem. Other times, a novel idea, technology, or system comes around and provides value in ways people are unfamiliar with. A niche strategy builds on the concept that the road less traveled can present great opportunities, and this article explains why this is so.
What is it?
A niche strategy seeks to develop plans, operations, methods, and activities around an exclusive/unique business idea. It starts by identifying an unmet need, an untapped potential, or a gap in the market. Next, strategies are developed, means are deployed, and resources are expended to meet the need or provide value in ways that have probably not been previously seen.
The niche strategy targets an exclusive audience by creating a differentiated product or service. It is a specialized value provider that often creates a new market or enters a less competitive one.
When do we use it?
A niche strategy becomes necessary and valuable under certain circumstances, some of which include:
When the market for a product/service is saturated with similar ones and competition is at its highest.
When there is a unique opportunity in a market segment, one that needs a certain set of skillsets or resources to exploit.
When a business seeks to create or grow its brand name and reputation. A niche strategy will help to establish a loyal customer base.
A niche strategy becomes expedient if you have fresh ideas and require an action plan to set it in motion.
What business questions is it helping us to answer?
A niche strategy provides answers to the following questions:
What can I do best, or what am I good at?
The answer to this question will provide you with a sense of direction in all of your planned business forays.
What does the market want?
A niche strategy can help you feel the pulse of people around you, so you know what they want.
What can I do differently?
If you can provide value to people in ways that they are not familiar with, you may just be sitting on a big break. A niche strategy will help you make the most of it.
Are there any gaps in the market that you can plug in?
A niche strategy helps you identify a unique quality product or product that people do not always know they need until they try it out.
What opportunities can I exploit in the market?
If you see strong prospects for a fledgling business opportunity around you, a niche strategy can help you plug quickly into it.
How do we use it?
In the next few sections of this article, we discuss the steps you can take to apply the niche strategy.
1. Identify Your Niche Market
The first step to implementing the Niche strategy is to find your niche. Your niche might focus on delivering a product that builds from a specialty or a unique value that you can provide. But before you test the waters, it is best to feel the market's pulse to know what type of reception to expect and what direction provides the brightest prospects.
2. Identify Your Niche Product
Look out for the daily and most significant challenges your target market encounters and understand how it affects them. Discover their needs, understand their choices and habits, and the factors that influence them. Do all these and you will have a firm idea of what line of business or product will achieve the greatest impact in their lives.
3. Develop Your Niche Products business plan
Now that you have identified your niche market and the niche product, your next step should be to develop a business plan using this knowledge. Your business plan should revolve around creating a product or service that meets the needs of your target audience. You should develop processes, expend resources, employ personnel, and implement strategies to achieve this goal.
4. Market Your Niche Product
Once you've created this unique product, your next most important task is to market it. You must strive to locate your target audience, as they should be most receptive to the product. Ensure that your marketing campaign is designed around them. Reiterate that the product will meet their unique needs or provide value for them.
Practical Example
A product designer with expertise in building mechanical models discovers that there is a gap in the local waste-to-energy conversion industry. He finds a locality that is facing the challenge of indiscriminate waste disposal and its effect on the quality of the air they breathe. He decided to build locally fabricated and portable incinerators that deplete the numerous landfills and convert their contents to usable methane gas.
These portable engines are designed to produce small amounts of methane from a singular 50kg waste/biomass input. He develops these affordable engines and markets them to a welcoming market. In doing so, he has carved a niche product and sold it to a niche market. He has also met a yearning need and then closed a gap in the biomass industry by providing a solution to the community's waste problem.
Advantages
A niche strategy tows the path less traveled; hence it is bound to be less competitive. The lower the competition, the higher the prospect of success.
It helps businesses establish a loyal customer base. Niche businesses create new markets, new opportunities, and new customers.
A niche business is less likely to experience failure, at least in its first few years of operation.
A niche strategy helps businesses create unique value propositions. This way, they can provide value to their customers in ways that might not have been previously experienced.
It provides better prospects for profit. This is because the markets for niche businesses are less competitive.
Disadvantages
A niche strategy limits your market and target audience. This could be a problem if you are in a hurry to go mainstream.
With a niche strategy for your business, the potential for a higher ROI is unclear.
It provides little prospect for growth and expansion. This is because the market is exclusive, and the product is not always a very popular choice.
Competition is a two-edged sword word with a niche strategy. If you're responsible for the success of a niche business or market, it'll catch the eyes of even bigger brands that'll seek to make their mark there. Without competition, however, the business might not be pushed to innovate or improve.
A niche strategy often tries out uncharted territories. If you don't have a strong brand name or marketing strategy, it might be difficult to convince people to patronize you or understand the value you're offering.
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