Today we talk about niche markets and differentiation. Why should we take that path, and why don’t many?
What does Niche Market mean?
Let’s start by talking about a market niche. What is it? In an easy way, we could say that it is a segment, a subset of the market, in which we find a group of potential customers with a similar profile and needs. Let’s take a very easy example: Websites. The market for web pages is very broad, since customers can be very different from each other, companies, individuals, freelancers, professionals, amateurs, etc.. Even the use given to them can be professional or purely as a hobby.
In addition, it is a highly competitive market, in which there is a lot of offer and of all kinds. If you try to ask for a quote for a website, you will realize that it can go from a few hundred euros to several thousand.
In these cases, the best strategy to enter such a market is to do it through a niche. Instead of “making websites” in general, choose one of those segments, choose a niche, such as “websites for dentists”, “websites for opticians”, creation of online stores, etc. For example, you can be a WordPress expert and explain the difference between a parent theme and a child theme.
Why choose a niche? 📊
The first thing we can ask ourselves when we are considering whether to choose a niche, is “Why”. Why should we choose a niche, can’t we just cover everything, then we have a better chance of attracting customers!
Yes, but no.
How many competitors do I have?
On the one hand, the more “generic” your services are, the more competitors you will have, and the more difficult it will be to stand out among them. It is not the same to be a “web developer”, a “WordPress developer”, or a “Genesis developer”.
While the first one will have a lot of searches in Google, it will also have thousands of competitors, and it will be much more difficult for you to make yourself known, stand out, position yourself by that term, offer a differentiated service, and convince the client that you are better than the other hundreds or thousands of web developers.
But if you’re a WordPress developer, you’re going to eliminate 90% of the competition. Yes, true: You’re also going to eliminate a large portion of the searches. But proportionally you’re going to have a much better chance of capturing the customer. And even more so if you go for “Genesis developer”, because there are very few of them, and when someone is searching for you with those keywords on Google (remember this trick that many seo’s don’t know; Metatag does not rank in Google), they’re very likely to hire you if you offer such a specific service. Why? Simply because the consumer sees much better to hire a specialist to solve their need. If we have a skin problem, we will go to a dermatologist, not a general practitioner. If we have a tax question, we will go to a specialized tax lawyer, because he will be knowledgeable about what we want in particular. That’s how we perceive it.
Also many people ask me how to embed a youtube video in your WordPress posts, well I explain it in a blog post. Then, you can specialize in a specific topic to stand out from the rest.
Price your Niche Market
On the other hand, there are the laws of supply and demand. You know that the more supply (or less demand), the lower the prices, because there is more to choose from, or less people who want it. And the other way around, the less supply (or more demand), the higher the prices go up, because there are few people to buy from, or many people interested in doing so.
This is so whether we like it or not, and the maximum exponent would be a monopoly, in which a single seller can set the prices he wants, as it happened here with Telefónica when it was the only operator available. The moment you choose a niche and specialize in it, you will see the end of price wars, bargaining, and pressure to obtain discounts from customers. Why? Because that will be the niche market price.
But in addition, and regardless of the market, a specialist usually charges more, because he is faster, better, and better (in his field) than a generalist. Why? Because he is more efficient. Let’s talk about it.
Achieving efficiency
And finally we can talk about efficiency. Let’s imagine a doctor who for a year touches all specialties: He is a dentist, otolaryngologist, endocrinologist, digestologist…. Everything! And he has 10 patients every day. At the end of the year, he will have seen 3,650 patients, with all kinds of problems.
Now imagine a digestologist, who only deals with digestive tract issues, who also sees the same number of patients. 3,650. And all about the digestive system. Which of the two of them do you think has more experience in the digestive system? Which of them do you think will know how to make a good diagnosis? Which of them will be better able to detect the problem and find the right treatment? Indeed, the specialist. Why? Simply because he has more experience, he has seen more cases, he has solved more cases, and that makes him…. More efficient! If you specialize in a niche, over time you will be better and more efficient, even if you don’t want to be.
If you make websites with Joomla, WordPress and Drupal, it will be a hundred times more difficult to improve processes than if you only do it with Genesis, which is a WordPress framework. Imagine the niche, how concrete it can be!
Choosing a Niche 📈
So let’s say you decide to specialize and choose a niche. You have already decided, and now the million dollar question is: Which niche do I choose? Or rather, which niche do I NOT choose?
What is the size of the niche?
What we must do before choosing a niche, and this is what can make us do it or not, is to see if it has a sufficient market size to make a living from it. We can do this with a low cost market study, which will tell us how many thousands of people make it up, or at least an insurable minimum.
And with these approximations we should calculate our potential. To make a simple and pessimistic calculation, let’s calculate that we are able to capture 1% of that market. If the size were 100,000 people, that would be 1,000 customers. Can we live with those 1,000 customers? It will depend on the product and the service, on whether we are a company or a freelancer, on whether we are a team or alone, on our prices, on our margins, and above all on our break-even point, i.e. the number of units we need to sell of our product or service to cover costs.
Our Strengths
Once we have a clear idea of the possible market niches we can target, now it is time to choose our own. Obviously, the criteria we must use are common sense: Which niche do I prefer? In which niche do I have more competitive advantages? In which niche do I feel more comfortable and like the most? All this is common sense, and we must apply it. We are not going to specialize in a niche we hate, because that would make us unhappy, and it is not our goal to make our lives miserable either.
So, let’s think about our strengths from the SWOT analysis that can give us an initial boost. If, for example, we have been specializing in a development software for several years, and instead of advertising ourselves as specialists in it, we do it with a generic one, we are wasting that opportunity. Or if we have connections with influential or key people in a sector, it can also be a competitive advantage to set up a business in a niche of that sector, and not in another. That will help us decide.
Don’t risk it
For the most conservative, who do not dare to take this step, there is a middle way that works for some people. Although I am not so much in favor of it, because it involves much more work and does not always work out.
The option is simply to set up a specialized brand. That is, instead of having a website, a brand, and betting on specialization, create a new one for the occasion. Thus, in the case of the “web programmer”, you can create a second website “WordPress programmer” in which you advertise and position yourself as such.
But this option is not at all simple. Doing this implies one of two things: Either you are taking time and resources away from your “other brand”, or you must double your time and resources to serve both.
For example, if you run a Google Ads campaign to raise awareness, you must double the daily budget, or take it away from the other brand. If you write daily posts, you will have to stop writing on one website to write for the other, or double the time you dedicate to each post, to write for both.
In short, it is duplicating time and effort, or undressing one saint to clothe another. Imagine all that effort concentrated on a single site, business, or project. At the end of the day, you will have one very good brand or two not so good ones. Less risky? Maybe. But not an easy road.
Summary and conclusion
Niches and specialization are a highly recommended business strategy, widely studied and of proven solvency. Specializing reduces your competitors, increases your margin, and makes you much more efficient in your work. But choosing the right niche is not easy, since we must make sure that we are good at it, and that it has a sufficient minimum market size. But with the corresponding previous analysis, we can avoid unpleasantness and find our ideal niche.
So I encourage you to at least evaluate this option, and think if you might be interested in targeting and positioning yourself as a specialist in your niche. Maybe you can do much better than you think 🙂
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