What Is a Niche Market? Finding a Profitable Niche For Your Business

What Is a Niche Market? Finding a Profitable Niche For Your Business

When you’re starting a business, it’s tempting to consider everyone as your potential customer. You want to get the most sales, right? With enough spare cash, you could run all the promotions you wish to and tap relatively broad markets. Although it may seem like you’re expanding your growth potential by targeting various audiences, the contrary is actually true. From the outset, you’re going to be competing with thousands of other companies. The good news is that you can still carve out space and build a profitable business by choosing to serve a niche market.

What’s the appeal of selling in niche markets? You won’t have to face quite as much competition to get customers for your business. Established companies generally target people in larger markets, leaving sub-sections of those markets underserved and ripe for picking. Therefore, serving a niche market can be an effective way to create a sustainable revenue stream that fuels growth over the long term.

There are other benefits of targeting a niche market, as well. You don’t have to appeal to everyone, so you can create highly personalized marketing campaigns that strengthen customer relationships. As you gain recognition among specific consumer groups, you will start to build a reputation as a trusted brand in your niche. People will buy from you and refer your business to others, creating new opportunities to improve ROI.

niche market

So how do you find a niche market? In this post, we’ll cover the basic definition of a niche market, how to identify one, and target it effectively, plus some niche market examples with big payoff potential.

What Is A Niche Market?

A niche market is a small but profitable segment of a broader market. It’s characterized by its own unique needs and preferences, which are different from the general demand of the broader market. For example, within the market for women’s clothing are many different niches or subcategories. Plus-size jeans are a niche market, as are jeans for pregnant women, jeans for teen girls, and jeans for athletic people. While the larger market, i.e., women’s apparel, may have higher volumes of buyers, consumers in smaller markets would be vying for your attention. This niche need should ultimately lead to more sales and more profits for your business.

Markets can become even smaller when you define them by the specific needs and preferences of their people. Some common ways to narrow down a niche market are based on:

  • Demographics - age, gender, education, and income level of people.
  • Psychographics - interests, values, and lifestyles of people.
  • Geographics - people in a specific country, state, city, or neighborhood.
  • Quality - people who desire premium, high, or moderate quality.
  • Price - people who are content with luxury, moderate, or value pricing. 

When defining a niche market, make sure to think about whether it can become profitable. Signs that a market has profit potential include the presence of online buyers, consumer acceptance, and some competition.

what defines a niche market

Now that you have a better idea of what a niche market is, let’s look at some examples.

Profitable Niche Market Examples For Inspiration

 Figuring out which niche market is best for your business requires some research. You’ll need to assess the industries that you’re interested in and evaluate consumer demand in those sectors. If you’re looking to get started quickly, consider entering a proven market with an established customer base. Choosing a popular niche will save you research time and the risk of entering the wrong market. Below is a list of niche markets filled with plenty of businesses serving the needs of a specific audience.

Note: We’ll be citing examples of real businesses for each market, all of which are listed on the Exchange Marketplace. If you find a niche market business you love, consider purchasing it instead of building one from scratch. What’s unique about these firms is that each of them is an ecommerce store catering to the needs of a particular niche market, so they’re easy to acquire and manage.

List of niche markets:

1. Pet Owners 

The pet industry is estimated to be worth around $100 billion in 2020. People in this market spend thousands of dollars on everything, from toys to canine beds to printed animal shirts. While pet apparel and supplies are taking over Instagram, there’s still plenty of opportunities to establish a business that stands out.

For example, Pet Bricks made a name for itself by selling colorful plastic building blocks that people can join together to create a brick pet. The ecommerce store offers building kits for huskies, shibas, corgis, dalmatians, and many other pets. Since there are not many other suitable alternatives for this product, it is easy to generate interest from potential customers.

niche market examples

While most businesses target dog and cat owners, you’ll also find opportunities for unique pets like horses, lizards, rabbits, and even cows.

More businesses targeting pet owners:

2. Fitness Enthusiasts

Fitness has long been a popular market. Recently, however, the industry has diversified significantly. From Zumba to CrossFit to HIIT to yoga, people work up a sweat in more ways than ever before. Smart businesses realize this and are coming up with different products that cater to these niche markets.  

Curve Yoga is a fitness apparel brand geared towards yoga enthusiasts, but especially yogis who want great styles at great prices. Sourcing items from factory resells allows the company to offer clothing at a much lower cost than competing businesses.

curve yoga website

Home fitness is another rising trend within this market - and it’s paving the way for exercise equipment businesses. Whether it’s panic-buying kettlebells or a Pilates class on Zoom, people rely on gear to help them exercise effectively within four walls. 

More businesses targeting fitness enthusiasts 

3. Parents

Parents make some of the biggest consumers, and these buyers have a variety of preferences and tastes. Some parents shop exclusively for their children, whereas others search online stores for products that can help support their lifestyle. Irrespective of the niche, businesses that make authentic connections with this market are in the best position to serve the audience.

Look at Baby-Tod, an online diaper store that started in this market. Its owner saw the opportunity to meet a specific consumer group’s needs by selling multifunctional diaper bags. The store’s flagship item doubles as a diaper bag, work bag, school bag, and travel bag (and yes, Baby-Tod bags are fashionable, too).

parenting niche market

More businesses targeting parents 

4. Travelers

With travel on the rise, you might want to target people in this specific market. From the frequent business traveler to the digital nomad working remotely, there are tons of audiences to tap into - in particular, digital nomad travel accessories have been trending lately. 

Coupled with the estimation that nearly half of the US and UK workforce will be freelance in 2020, businesses can target remote workers who leverage their flexible professions to explore new places.

Nomad Travel Gear is an example of a business serving the market of digital nomad travelers. The brand sells quality outdoor gear and a slew of other things, including an anti-theft backpack, tripod stand, and many other useful accessories.

nomadgear

Pro tip: Researching travelers’ lifestyles and motivations can help you identify opportunities to serve them and set up a profitable business.

More businesses targeting travelers

How to Find Your Own Niche Market

You don’t have to reinvent the wheel to come up with a niche market, but it’s beneficial to learn about different ways to identify profitable niches. This is also how you expand the niche market ideas available at your disposal. As a reminder, your niche will be a segment of a broader market and will define everything from:

  • Your branding and unique selling proposition
  • Your marketing strategy
  • Competitive positioning
  • The product features you include
  • The price range for your products

So how do you find a niche market? Here are some methods you can apply:

Get Ideas from Google

The best way to start researching niche markets is to understand what other businesses are selling in a particular industry. For the purpose, head over to Google.com and type in your niche keyword. You then get to see all the potential audiences and needs you could target. Through trial and error, you can research different preferences and trends until you identify a gap in the market. 

Let’s see how this works. If we type “women’s jeans” in Google, the search engine presents us with the following results:

how to find your own niche market

At a glance, we’re able to identify a range of potential niches and angles to target, from “mom jean” to “boyfriend fit.” As a side note, you can also scroll to the bottom of the page and see “related searches” for your term to get even more niche ideas. 

niching down

Research Forums and Q&A Websites

Sites like Reddit and Quora are excellent for researching potential niche markets. The questions people post on these sites can tell you a lot about an industry, what they like, and the problems they’re currently facing. Plus, if you pay attention to the answers, you can gain valuable insights into what kind of solutions people are seeking.

Here’s an example:

For entrepreneurs looking to enter the fitness market, the information above reveals a potential niche: gym-goers who are serious about personal hygiene.

See What Influencers Are Promoting 

Another way to find a niche market is by researching influencers on Instagram, YouTube, and other social media platforms. Search for a specific industry and see what types of audiences other brands are trying to target with the influencers’ help. It’s also a good idea to see what hashtags they’re using as social media users are known for organizing themselves through specific hashtags. 

influencer niche research

To get the most out of this strategy, make sure to research micro-influencers. They’re individuals who have a modest number of followers, but they serve passionate audiences. 

Tips to Evaluate Your Niche Market

For your niche market strategy to be successful, you need to ensure that there are enough consumers in your potential niche to justify owning a business. Here are some ways to do that:

  • Create a website for your potential business and advertise it to see how people respond to your unique value proposition. Maybe you get a lot of inquiries, indicating that you’re onto a winner.
  • Request feedback from your first customers, send a few products to influencers, and ask for an honest assessment. Early feedback is crucial if you want to refine your idea before you present it to more people. 
  • Go through industry reports on the trends and size of your target market. Companies like Gartner, Forrester, and Nielsen regularly publish market outlook reports for different industries. 

Conclusion

Many entrepreneurs worry that narrowing down or targeting a smaller market will restrict the sales of their business. But if you’re providing solutions to problems and have done your niche research correctly, the opposite turns out to be true. Working in a niche market helps you stand out from competitors by establishing your credibility as a specialist business. When you focus your energies on the right people, you maximize your impact and reap the rewards of brand loyalty. Identifying niche opportunities can be tricky, but if you know where to look and dig deeper into the options, it shouldn’t be hard to find a profitable, underserved market.

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