As Seen in AMEX Open forum, USA Today, The Charlotte Observer, America's Premier Experts, the Daily

As Seen in AMEX Open forum, USA Today, The Charlotte Observer, America's Premier Experts, the Daily

Tuesday, January 15, 2013

Which niche should you focus on first? Part 3 of 3

Who is your ideal target niche? Part 3 of 3

Finally, let's put everything we've figured out about our market together and identify the most promising niches for you to approach first. 

In Part 1 & Part 2 of this series, we looked at who your ideal customer is and who your competition is. 

You should have answers to questions like:  

  • How many customers are in each of your potential target niches?
  • How much will it cost you to market to that niche?
  • How many sales will you likely make?
  • What is your profit for that niche?
  • How much does it cost for you to sell one product versus selling the product in bulk?  
    • The costs to manufacture/produce the product won't be very different if you are selling subscriptions to an online training course, but could mean a huge difference in fulfillment if you have a physical product that has to be manufactured and shipped.
    • If you have a physical product, can you reasonably pass on the extra costs of shipping single orders to the consumer?  

Here's the formula to determine which niche you should probably approach first*

         (# potential sales x profits from each sale) - marketing costs 

Which niche looks the best from this profit perspective?

* Caveat:  There is some level of marketing investment here that you must be OK with in order for this niche to be a good fit for you.    Essentially, you need to make sure you can cover the cost of marketing to this ideal niche.
  • Is the marketing cost over a long time? 1 year, 2 years, 6 months?  
  • Is the value of the marketing a cost you can cover at this point in your business?  
  • Can you defer those costs until the sales start coming in? 

If your most profitable niche is not a niche you can appropriately market to YET due to costs, go to the next profitable niche and see if you can make that successful. 

OR, if you really think the first niche is the best one for you, start thinking of ways to lower the marketing costs.  For example, instead of buying TV ads, having a center booth at a trade show and having full page magazine ads, maybe you could post on influential blogs and get online reviews.  Consider getting a partial-page magazine ad and sharing a booth with another (non-competing) vendor.

If your marketing plan is "get on QVC," the odds are against your success, but there are likely lots of other creative (cheaper) ways to reach your target market.  You probably know where members of that niche get together and look for information, especially if you are part of that niche.

Pick your niche market.  Make sure it's a niche that will LOVE your product and that you can reach with your starter marketing budget. 

Niche marketing is like climbing stairs.  Focus on ONE niche and do it the BEST you can.  Get that one segment of the market 'under your belt' then move on to the next market.  

Action steps:
1) Write the answers to the above questions down outlining why this niche is right for you right now (this is the first part of your company manual and marketing plan!). 
2) Figure out if you can afford the initial marketing efforts in addition to the manufacturing costs. 
3) List your niches in order... 1st choice... 2nd choice...3rd choice...

Questions? Comments? Have I forgotten something?  Stories about how you first chose your first niche for your product or service?  Talk to me. 

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