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. 

Which niche should you go after first? Part 2 of 3

Don't go launch your product to the "market," launch it to the perfect "niche"  

After the post on identifying your perfect customer, I am hoping you actually physically made a list of the various subgroups of people that might be interested in your product.  When I'm doing this exercise, I devote a page in a notebook to each one. 

Marketing budgets are limited, so you can't go after them all at once.  Which one should you go after first? 

In the last post, we focused a lot on the small things that separate the market into certain groups.  We talked about the people and their pain points.  Now let's see how crowded each niche market is.

Focus on one niche market and identify the competition situation in each. 

Identify the competition situation within each of these niches:

1) What options for solving their problem do the members of this niche have currently?  

*Keep in mind these options are your competition ONLY if members of the niche actually see the competing product.  If there is a solution to one of their pain points out there, but it's not being pushed on them, don't count it.

Is there anything else in this niche market that solves the problem you're trying to solve? 

Are you the only company with this solution in this niche market?  

If you're a member of the niche market, this will probably be easy.   If you aren't a member of this niche market, you might need to do some research.  Ask friends and colleagues who might be part of that other niche about this.  Don't just rely on blogs and intuition for this one.  Do your research.  

2) How much do members of this niche currently pay for competing products or services?

How much would they pay to be rid of that pain point?  Notice I'm not saying how much would they pay for your solution.  Remember that the consumer really only wants the solution you present, not the product or service itself. 

Again, being part of the niche will make answering this question a lot easier.  Use your network to find the answer if you're not part of this particular niche market. 

3) How do those competing products or services market to this niche?

Are they at trade shows?

Do they rely on word of mouth?

Do they use Facebook or trade publications?

Do they market directly to the consumer? 

4) How much would it cost to just get in touch with the connectors in this market?

Marketing to connectors is usually a great way to make your money go further, if you can get a hold of them easily.
Do the connectors all read the same magazine?  How much would it cost to get an ad in there?

How else are those connectors connected?

Marketing isn't free and the price can vary widely depending on the type of marketing you're considering. Give it hard look and get some ballpark figures before making your decision. 

Go ahead.  Write it down.  This is not the kind of exercise you can do in your head

Once it's written down, you can refer to it going forward. 

Next time, we'll put this information together with the niche info and bundle it into an equation of sorts that takes into account the amount of customers each niche has and the cost of marketing to each niche.

Questions? Comments? Feedback?  Did I miss something? Does this ring true for you?  Let me know!

Did you miss Part 1?

Go to the last part of this series with Part 3