Niche positioning: Reasons why smaller can be better

Companies or individuals investing in new ventures don’t like to be too narrow with their positioning because they fear they won’t get enough business if they only target a small segment of their chosen market.

Many companies are comforted by the idea that if they strive for a position on the market that is appealing to a wide range of people, then all they need to do to become profitable is to grab a small share. “All we need is just 5% of the total market!” “Let’s start advertising!”

They don’t realize that a small market share in a competitive market can be extremely difficult to achieve with a brand-new product. The “shoot to the middle” strategy fails to recognize that there are many competitors already fighting for market positions in the core of the marketplace, such as the “low-price provider”, “best-in class service,” etc.

You can increase your chances of survival and success by securing a niche or market position that is perceived to be at the edge of the market. You will have a product that meets the needs of some people on the market as opposed to a product that appeals to everyone but is only mildly appealing.

Next time your client (or company) is tempted to target everyone as the market for their new product or service, think of these three compelling arguments to shoot small.

More likely to make an impact

You are more likely to succeed in the market if you have a strong position and target a specific market niche. It gives your business an identity and encourages customers to deal with you who may not be familiar with it.

If you’re a new agent, you might want to target the niche of first-time buyers. It’s okay if an older couple who has purchased and sold ten times ignores your position. Your marketing message may be heard by a young couple just out of college. They will respond to your offer because it is tailored to their specific needs.

A niche strategy will give some people in your market a good reason to contact you. It is always better to share with a few people a strong reason to contact you than to give many merely mediocre reasons or none at all.

In order to survive in the long term, you must gain some revenue early on in your venture. This is a fact that many businesses forget when they forecast sales. Early sales can be more important than future sales, depending on the cash flow situation in the early months of the venture (or if your corporate office has the trigger finger). It’s never a bad thing to make a few bucks early on.

You will be better able to defend yourself and your business

You can bet on the fact that as soon you get a few clients, your competitors will come after them. You can protect your expanding customer base by establishing a strong market position. A new real estate agent can use the example above to turn the tide against the most successful agents by creating a niche for first-time buyers.

It is the same for almost all businesses. If you can match your offer to the wants and needs of a specific niche, then you will build a clientele that is not easily swayed.

You can grow your niche organically.

If you meet the needs of your market niche, it will do some marketing on your behalf.

Referrals and word-of-mouth advertising can be generated from your niche clients to attract new clients outside your niche. Your first-time buyers may refer their neighbors, parents, coworkers, etc., to others. Even though you may have a place as an expert in the first-time buyer segment, positive word-of-mouth promotion can convince people to work with you even if it is their 10th home.

Your strong and defined position in the market can help you grow your business over time to other segments and beyond your current niche.

Obviously, the word will also spread within your niche. People in your niche might share certain demographics and be more likely to tell their peers about your business. First-time homebuyers, for example, are more likely to share similar demographics and have a large number of social contacts who are also in the same age group. This makes it easier to spread the word about your business.

A niche-specific market position is an excellent opening move for any new business or business entering a new market. A niche market position is a great way to start a new business, whether you’re a marketing manager for a large corporation or a real estate entrepreneur. It allows for both good short-term opportunities and long-term growth.

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