Finding a niche is one destination which almost every online business, irrespective of its size, wishes to achieve. This destination is not limited to online businesses but also to every self-seeking individual. It is all about creating and marketing a product, which is highly differentiated from competitive firms’ products. The concept of niche market has become even more relevant since the unprecedented surge of online product marketing and creation of websites to cater to a specific audience, and hence perspective consumers.
Before dwelling further into this concept, let us understand how possessing a niche serves the need of an online business. A niche market is defined by a specific market aimed at specific groups of clients. Economic implications of this are extremely profitable as a niche market, due to the very nature of it, eliminates any other substitutes of the product. Natural elimination of possible substitutes leads the online business to exercise independent pricing and output decisions, which subsequently leads to massive profits for the business. Massive profits not only strengthens the market position of the online business but also creates an industry of complementary products, which serves to complement the business’ product, thus increasing the barriers to the entry of new businesses vying for entry into a particular online industry.
One obvious question, which should arise in your mind, is how does an online business research and find a niche. This is in fact the most difficult phase of the entire process. In the realm of online marketing, firms can use many online tools, such as Google trends, Google’s free keyword tool, and Google’s Insights. All these tools facilitate in understanding the market trend comprehensively.
Use Online Analytics Tools
Google trends provide data, especially graphs over a specific time period, depicting popularity of a certain term in Google’s organic search engine. This allows an online business to understand the market preferences better. For example, for the term “personal computer repairing”, Google trends would suggest a decrease in the popularity of this search over the last few years due to the changing dynamics of the computer market. Inferring from the tool, it is advisable that a business should not look for exploring a niche market in this field as the online industry that they intend to be a part of is undergoing a major phase change. The target consumers are undergoing a transitional period in their technological preferences.
The popularity graphs could be a great source of information while researching for possible internet marketing strategies for a particular niche market. It must be remembered that a niche market in a relatively new industry is much more viable and practical than one in a long existing industry. For example, it is financially more advisable to craft a niche industry in the Cloud computing industry than in the online retail industry due to the high barriers to entry prevalent in the latter industry as compared to the former. Furthermore, creating a niche market requires robust research and development on the part of the online business owner. Well established industries such as the aforementioned online retail industry, due to their profitability over a sustained period, already have big market players and are highly saturated, making it extremely difficult for new businesses to enter the specific online industry. However, with just enough research and perseverance it is possible to break the stranglehold that major online marketing businesses have a niche.
Conduct surveys or use online survey engines
Once a certain niche market has been chosen, the task of personalized surveys of already existing virtual market players and future clients should be undertaken. This could be done either by hiring a survey agency or using free websites such as survermonkey.com. Popularity graphs and Google’s free keyword tool can suggest the market size but not the profitability and size of the online industry. It is important to understand the margin of profit and growth perspective of the target online industry using surveys. I extensively used the website surveymonkey.com during my time as an online marketing associate. It not only gave me a comprehensive and quantitative analysis of the market, but also enabled me to better understand the needs of the clients and accordingly craft out a client specific online market.
Avoid the bubble
At this stage, it is important to understand that a bubble must be avoided. In the past, there have been instances of online industries experiencing a rapid rise and fall within a short span of time . The dotcom bubble is a prime example of the risks associated with over-optimism in a specific online industry. To analyse longevity of a rising online business, certain factors play an important. They are the nature of the final product, complementary firms, joint firms and trends on the stock market (if any). These factors are very crucial as a strong web of complementary firms can create strong fundamentals for the online business, which can resist any form of speculation or sabotage.
Profitability of a new online business entering the ever expansive virtual industry in search of a niche market can be analysed by using online tools. Additionally, the number of existing firms in an industry can also be determined to get a rough gauge of the level of competition. An overly crowded industry reaches a saturation point in a relatively lesser time as compared to an industry with a relatively fewer number of competitive firms. It is advisable to enter a niche market, which has low to no barriers to entry, as evidenced by the success experienced by internet marketing firms since the birth of virtual markets.