How to find your niche in business: a beginner’s guide

Key takeaways

• With niche marketing, you’ll focus on a specific group of potential customers rather than trying to appeal to everyone
• You can target online ads to customers based on geographic area, recent internet searches, and many other distinguishing factors 
• Find a profitable niche by considering your business’ strengths, the needs of your target market, and customers your competitors overlook

Many business owners want their product or service to appeal to everyone. After all, a vast potential market seems like an advantage. But in most cases, finding a niche—a specific audience that benefits from your product or service—and narrowing your focus will actually help grow your profits more.

Potential customers see many advertisements a day, from their inboxes to social media. By focusing on your target market, you can cut through the noise, offering your ideal customer a personalized message that speaks directly to their needs and problems—elements crucial to making sales. 

According to Salesforce, 92% of marketers say their customers and prospects expect a personalized experience. 97% of these marketers generated measurable increases in return on investment (ROI) by personalizing their messaging to their specific audiences.

In this guide to niche marketing, you’ll learn how targeted messaging can help you stand out from the crowd and tips to find the right niche for your business—with plenty of room for growth.

What is niche marketing?

Niche marketing is a focus on a small but significant segment of people—a group of people with specific needs or interests, whom your products or services best serve. When you define a specific niche, you can also improve your advertising and customer service. For example, you’ll be able to send laser-focused messages that are more likely to engage potential customers. 

Why do you need a niche market?

In the digital age, competition is fierce. Thanks to ecommerce, your potential customers have instant access to all available options, including alternatives that might entice them away from your business. With a single click, they can search online for the exact style and price they want, compare prices from thousands of outlets, and have a product shipped to them for free. 

It’s hard for a small business to match those options, so instead of trying to scale up to your global competitors, consider paring down. Focus on a target market of potential customers who will choose your business over the cheapest, most convenient option available because of the value you provide.

For example, maybe you run a shoe store that custom fits shoes for young athletes. In this case, you’d advertise to parents of local high school students. If you specialize in orthopedic shoes for older people, you might reach out to senior living facilities in your neighborhood.

No matter your market, it’s more effective to send a strong marketing message to highly specific audiences than it is to convince everyone who buys shoes to visit your store. 

Examples of niche marketing

Many popular brands have built their brands by targeting specific niche markets:

• Whole Foods targets health-conscious shoppers willing to pay more for organic products
• Tiffany & Co. sells luxury jewelry to wealthy and aspirational consumers
• Lush Cosmetics offers bath and beauty products for people who value eco-friendly and ethically produced products

Each of these brands exists in a crowded industry—there’s no shortage of grocery stores, jewelers, or beauty brands in the world. But these brands have become household names because they focus on their niche markets instead of trying to make everyone their customer.

How does niche marketing work in the digital age?

Online advertising allows you to target a specific audience for both online businesses and brick-and-mortar locations. Instead of putting up a billboard and hoping to attract local customers, you can invest in local ads that display to users who live within 30 miles of your store. For example, Yelp Ads puts your business in a number of key places on the site and app including above search results and on competitors’ pages on Yelp. This means customers are more likely to find you when they search for the goods or services you offer.

You can also target customers based on recent internet searches. For instance, if you sell mid-century modern furniture, you can target ads at people who have recently searched for retro dining sets. Entice these potential customers with photos of your own dining sets and a discount offer to join your mailing list or another lead magnet.

How to find your niche for your business

To find the right niche for your business, consider three factors:

• Your business’ strengths
• Your target market’s needs
• Markets your competitors are missing 

Your goal is to identify an underserved market that can benefit from your product or service. When these three factors overlap, it means your business is well-positioned to serve an unmet need in that market. 

1. Your business’ strengths

Start by evaluating what you’re best at and what makes you different. Do you provide skills or experience your competitors lack? For example, if you run a vintage clothing store, do you have a background in fashion design? Do you curate your collection to focus on a specific style or trend? Your strengths are the unique value you offer to customers. 

2. Your target market’s needs

Think about the people who would be most interested in your products or services. What do they care about, and what pain points or problems can you help them solve? The best way to answer this is by researching trends. 

For example, if you run an all-natural pet store, you might look at pet industry statistics and notice the organic pet food market is growing and people are very interested in fresh pet foods. 

As you conduct market research, look for areas where your business strengths overlap with your target audience‘s needs. If your network or store layout makes it easy for you to source and sell fresh foods, interest in this kind of pet food would be a good opportunity for you. With this research, you can build buyer personas to get a good grasp on your customers’ needs.

3. Markets your competitors are missing

Next, do competitor analysis by researching what other companies like yours are offering—or not offering—to your potential niche. If you learn that few of your competitors cater to your target market, their needs might be well-suited to niche marketing. An unmet need is a good sign you’ve found a potential niche market for your business. 

For example, if you own a furniture store in an area saturated with discount furniture stores, you’ll do better business by serving a different market. If your area has a lot of offices, you might specialize in workplace furniture. If you’re located in an affluent area, offer one-of-a-kind pieces or custom designs. 

Refine your niche

Once you’ve considered your business’s strengths, the needs of your target audience, and how you can fill an unmet need in the marketplace, it’s time to brainstorm with your team and refine your niche.

Your niche should be specific enough to serve a group of people, but not so specific that there’s no one left to sell to. To quantify this, check whether keywords describing your niche have enough search volume to sustain a profitable business. Use online tools to look up how many people search for those keywords regularly in your area.

For example, the organic pet shop owner can put their niche to the test by comparing keywords. “All-natural pet supplies” is too general—a quick internet search reveals there are already many stores that serve this market. “Organic pet food” has fewer results, but it still might be too broad. “Organic pet food, treats, and toys for older dogs,” however, is a specific niche that few stores are serving. That means it’s a safer bet for a niche market.

Keyword research can help you refine your niche and pursue it with confidence. Before building your marketing strategy around one phrase, do keyword research on different versions of the niche market and look at Amazon and other sites to see what the competition offers.

Find the right niche and start marketing

Your niche impacts every step of the business process, from your business ideas to your customer base. Even established brands can refine their focus on a target audience as they generate new business.

Find a profitable niche by considering your business’ strengths, the needs of your target market, and areas where your competitors are lacking. Lastly, make sure you’re passionate about serving your niche idea. You’ll be spending a lot of time and energy building your business, so it should be something that excites and inspires you.

Once you’ve identified your niche and target audience, learn how to deliver compelling marketing messages that speak directly to their needs.