Niche Marketing: How to Identify Niches and Find Untapped Profit

Niche Marketing: How to Identify Niches and Find Untapped Profit

Niche marketers know that consumers are chasing the “long tail” on the Internet. The “long tail,” in marketing terms, is a descriptive term for the two ends on a standard distribution curve, meaning “anything not average.” Consumers used to spend countless hours looking for “long tail” products, like the popular V-neck blue sweater, but in purple or orange colors. Niche marketing online is about catering to this customer.

Since brick-and-mortar stores cater to the average mainstream consumer, they weren’t able to carry a huge number of long tail items in their inventories. However, online marketers make use of virtual inventories to be able to carry as many niche items as they can. It’s easy money and they can’t be found offline.

targetsDemographics Are Key

Instead of marketing to a huge demographic of mainstream preferences, online marketers are looking at selling to niche demographics. Instead of marketing to all 50 plus baby boomers, they might want the divorced baby boomer with a kid in college that prefers tea over coffee in the morning. In the past, that sort of narrowing of a demographic was deadly, but not now. Social networking sites gather so much information that they know which of their users fit this demographic. It allows marketers to think up products and analyze demand that will stimulate a sale. For instance, you might market a single cup brewer for loose leaf tea to this divorced boomer and they would most likely buy it. However, if you were to create a larger campaign, and market it to everyone who drinks a beverage in the morning, you’d likely not make enough to pay for the effort. The trick is targeting the niche so well that the sale is predetermined and effortless.

Internet Drives Niche Marketing

The Internet has made it very easy for consumers to search for those difficult to find products online via search engines. The same dynamic has also made it easier for marketers to market the long tail by putting in keywords and phrases that bring these niche customers to their doors. Social networking is a place where people converse about their likes and dislikes and the careful marketer will use this information to identify niches and product needs based on the buzz a post or status update receives from groups online. If college-aged students are talking about the latest cruise trip to the temples in Mexico, that is valuable information on the preferences and motivations of a niche group. If you can then market a niche offering, the sale is almost made before you hit “Update.”

Selling Before the Sale

Pre-sales are getting popular and can help you determine the demand in a narrow niche. The idea is to create a custom branded item (like a custom backpack) or discount coupon that ties into a larger niche product. You promote that to your niche instead. If you want to write a book on “Saving the Frogs” to an environmentalist niche, you may try to see who will sign up for a tip list for how to spot frogs in their gardens. If too few do, you either don’t have the audience or your niche subject is too narrow. Discount coupons for a pre-sale are also good indicators for demand on a “yet to be released” item and can help to identify successful niches.

photo by: hans s

Written by Miranda Marquit

Miranda Marquit is a freelance writer and professional blogger, specializing in personal finance, small business, and investing topics. She writes for a number of financial web sites and blogs, and has been featured in numerous media. Read about life as a freelancer at MirandaMarquit.com and in her book Confessions of a Professional Blogger.

2 Responses to Niche Marketing: How to Identify Niches and Find Untapped Profit

  1. Miranda – Excellent post. Niche marketing is one way small businesses can compete with their large competitors. This is how many of the start-ups got started. Finding a hole in the market and catering to that demographic is the best way to generate profit.

    • Thanks. Yes, in a world of big box stores, a niche is vital. And the good news is that technology makes it possible for you to find a larger niche, since you can reach outside your geographic area.

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