If you don’t follow a niche that you are passionate about then the chances of quitting are enormous.
It’s a misconception to think that you have to get involved in a very big business project before you can make massive profits.
Big business projects usually require astronomical amounts of capital, enormous risks and your undivided attention. This certainly explains why most people believe that great wealth is beyond their reach. They simply don’t have the capital and they can’t afford to take the risk.
But smaller, more specialized projects, which form a niche market, could overcome this problem. This offers small to medium businesses the opportunity to obtain a very strong foothold in the market and to make huge profits with limited risk!
What is a Niche Market?
A niche market is a small, specialized market segment. This type of market segment is usually characterized by a strong demand for a specific product.
A niche market can be illustrated in a practical manner, as follows, using the market for children:
The large, logical markets (needs) are always attended to first. In addition, these markets are served by large, powerful companies, which makes it extremely difficult for the small businesses to also compete.
Examples of these markets include children’s toys and clothes. These items are needed by every child and are already being sold on a big scale. The secondary markets come next. Products that fall under this category are still fairly popular, but enjoy much less demand. An example of this would be a general, educational program for children.
Finally, there’s the very specialized market that is the niche market. In comparison to the total market, the number of customers who fall into this market segment is very small. However, the needs of this market segment are much stronger than normal, day-to-day needs.
Another example of a niche market product is school equipment for a child who is left-handed. If the child experiences problems, the equipment should be able to completely resolve the child’s problems. This child’s problem may be much greater for the child, and possibly also for the parent, than it may seem to outsiders.
The child’s entire life will be affected by this, as he may struggle at school to use scissors, instruments and notebooks, which will be smudged with ink by his left hand.
Benefits that a niche market offers
When you carefully consider the benefits that a niche market offers, it becomes clear why this field of business offers you the opportunity to earn exceptionally high profits.
Compare equipment for those who are left-handed to clothing. There are general price norms for clothing. There aren’t any norms for left-handed equipment, as the market segment is too specialized and unique.
Clothing is a basic need, while obtaining equipment for those who are left-handed is a specific need. Some people who are left-handed will possibly even be prepared to pay quite a few hundred dollars to obtain the right equipment, since this problem could possibly affect their self-confidence in some instances.
Furthermore, products in a niche market are scarce, because a niche market, by definition, only serves a small market segment that involves relatively few suppliers.
Wider marketing is possible
A business that operates in a niche market can usually market on a much wider, geographical basis than an ordinary business, as the type of product that a niche market operator offers is not readily available.
Many, successful, small businesses have often been shoved out of the market by a big business. Niche markets are too small for large businesses to enter into.
Big businesses are usually only active in mass markets with large turnovers. Their tactic is to start a price war, which they can maintain for an extended period of time, since they have sufficient funds to do so.
The small business eventually snaps due to the price war, because it can’t handle losses to the same extent as the large business.
The marketing risk is smaller
The marketing risk in niche markets is much smaller than in general. Successful niche markets do not depend on a person’s discretionary (surplus) income, but cater to an essential need. Here again, you can compare the equipment for left-handed people to clothing.
A business, which offers a product that fulfils a vital need, will be less sensitive to economic slumps. People will still buy the product.