By Winmark Business Solutions
Most marketers know that 20 percent of buyers consume 80 percent of product volume. If you could identify that key 20 percent and find others like them, you could sell much more product with much less effort.
The heavy users of your product can be thought of as a market niche that you should attempt to dominate. Niche marketing today means targeting, communicating with, selling and obtaining feedback on the heaviest users of your business’s products or services.
Picking the right segment of the market is important to achieving sufficiently large sales volume and profitability to survive and prosper as a company. Picking the right market segment means that it is:
- measurable in quantitative terms
- substantial enough to generate planned sales volume
- accessible to your company’s distribution methods
- sensitive to planned/affordable marketing spending events
It is also important to examine other factors that could affect your company’s success:
- strength of competitors to attract your niche buyers away from your products
- similarity of competitive products in the buyers’ minds
- rate of new product introductions by competitors
- ease of entry/protectability in the market for your niche
Perhaps the driving force behind niche marketing, or segmentation, is the need to satisfy and keep those consumers who really love your products or services. Consumers become increasingly more sophisticated and demanding. And product choices continue to expand with prosperity and world market competition.
Even large companies have embraced niche marketing, continuing to refine and target their product offerings to different buyer groups. As an example, Nike restaged a multi-billion dollar company that had plateaued by pursuing a segmentation strategy. Nike designed and marketed athletic shoes for each different sport, often further segmenting with specialized models within each sport (e.g., “Air Jordan” basketball shoes, and additional basketball models called “Force,” represented by Charles Barkley and David Robinson, and “Flight,” represented by Scottie Pippin).
It is also important to be able to identify and estimate the size of your target market, particularly if you’re thinking about a new venture, so that you can tell if the customer base is large enough to support your business or new product idea. Remember that it’s not enough that people like your business concept. There must be enough target buyers on a frequent-enough basis to sustain your company sales, spending and profits from year to year.
For example, selling a product or service that people may need only once in a lifetime (e.g., an indestructible toothbrush) may not be a sustainable business, unless a large number of people need it at any given time, or everyone needs it eventually (e.g., funeral services).
About the Author
Winmark Business Solutions (WBS) is a free Web site for small businesses and entrepreneurs containing over 6,000 pages of business-critical information and downloadable tools at www.WBSonline.com. WBS is a division of Winmark Corporation, a multi-brand franchisor with nearly 900 franchise locations in North America. With over 25 years working with small businesses, WBS draws upon years of experience to bring important small business articles, information, tools, forms, checklists, calculators and downloadable forms to the small business owner to help their business grow. WBS contains over 6000 pages of business-critical information all available at www.WBSonline.com.