Marketing to a Narrow Niche

Niche marketing has really buzz over the last few years, with many marketers claiming that it is a more effective way of marketing. Niche marketing means you select a facet of a market, and serve that market only. I agree that it is something that can be effective for very small businesses, but it also has limits that need to be understood if you really want to make money at it.

For the most part, niching is something that happens naturally. Oh, a few people have to consciously think about it to do it, but most only have to think about it to figure out the niche they already occupy. Most niches are what they are – you can’t easily broaden or narrow them. A product or service works for the people it works for. Good niching just identifies that accurately and then maximizes the potentials.

Very narrow niches are difficult to market for. And often, you can’t broaden the niche just because you’d like to. If it doesn’t exist, you can’t create it. Let me explain through an example:

• We sell a piece of software for Webmasters. Ok, BIG target market, right? Well, maybe .1% of the population could conceivably be classed as a Webmaster, or Web Designer. With a world population rounded to 7,000,000,000, we have a nice fat number to start with. .1% = 7,000,000
• The most likely people to want this are self-employed Webmasters, or very small web companies. So chop that number by 80%. That gives us 1,400,000.
• Our software is ONLY for Webmasters who also sell hosting. We just chopped another 90% off of our market base. This leaves 140,000.
• It is also ONLY for those who use Cpanel hosting. So we just whacked another 60% off the previous total for a remaining number of 56,000.
• And, it is only for those who use a specific billing manager – WHMCS. We just reduced the last total to about 10% of what it was, leaving 5600 people.
• Of that total, only a fraction – perhaps 20%, will be in a position to WANT the software we have – they will want the automation feature we provide. 1120 brave souls.
• Probably 30% of those people will think to look for it, about 1/3 will try to code their own, and another third will want it but think it does not exist so they won’t look. 336 people left.
• Of those, about 1/3 will actually be prepared to PAY for a solution. Most want one free (it doesn’t exist, but it doesn’t keep them from stubbornly claiming that they should not have to pay for it). That leaves about 111 if we round off.

So at any given time, we may have about 111 people worldwide who are ready and willing to buy the thing we have, IF we can reach them and let them know that we have it. Finding 111 people in a world of 7 billion people is a difficult thing to do! The amazing thing is that we do actually make sales with this software.

But the niche is very tight. Even if we promote where they are likely to hang out, we still have a low chance of locating them, because they are always just a small portion of the people there. It makes marketing it difficult.

So why do we do it? Because we need the software, so we have to develop and maintain it anyway. We might as well sell it to those few people who do need it.

Can we broaden the niche? Perhaps. We could code a version for Plesk. This might increase our market base by 30-50%. Is it worth it? Recoding the app for a second version would cost us several thousands of dollars, and might give us only 1-2 sales per month (at around $300 per sale). We’d have additional ongoing development and maintenance costs as well, which might in themselves offset the profits. We don’t NEED a Plesk version, we don’t use Plesk, so our motive for doing it anyway is gone.

Niching is a good way to differentiate a business, but it is important in doing so that you make sure there is enough of a target market to actually promote to and earn from. Otherwise it can be very difficult to profit from your niche.