Dirty Underside of Niche Marketing Trend

The trend toward increasing “nichification” of business is a theme I write about often here (read Small Businesses Pick Niches at sister site, TrendTracker).

Sticklers for proper use of the English language may take issue with using the word “nichification.” Don’t bother to look it up in your dictionary. You will not find it in most dictionaries because it is not a real word (although you will find numerous links in Google, so I suspect sooner or later the word will appear in the dictionaries).

What it means is that businesses — especially small businesses — increasingly target niche markets as a way to stand out and also to focus their offerings.

Part of the reason it is possible to focus on niches in the 21st century is that the costs to produce, market and distribute many kinds of products and services have dropped. Therefore, businesses can afford to create offerings that appeal to narrow niche markets. We are no longer forced into business models where we must provide one-size-fits-all, as we might have been 50 years ago.

For instance, in the context of books and music, Chris Anderson, Editor of Wired magazine has popularized a phrase called the Long Tail. The Long Tail describes a business model of selling small amounts to niche markets, instead of selling large amounts to a mass market. He points to lowered production and distribution costs as being a driving force behind the trend.

In general, picking a niche is a good thing for a business. It helps a business stand out from the crowd. With a niche focus, you appeal more powerfully to those customers who are interested in the niche — because today customers want it their way, not a generic way. And picking a niche also positions the business to adopt a laser-like focus, instead of scattering efforts to develop too many product or service features or trying to understand too many market needs, and not excelling at any of them.

But have you ever thought of the flip side of this trend toward nichification? What if your niche is too narrow, too small, too obscure? What if your niche is so limited that you are not selling enough?

Jim Logan writes that there are times when you cannot give a product away. That may be a dead giveaway that your market niche is too narrow. He says that he is seeing more challenging marketing situations due to too narrow niche marketing. He writes at the BizInformer blog:

“… if you make a free offer and no one takes you up on it, you likely don’t have a compelling product or service. Yes, there are times when you can’t give it away. If you find your free offer is routinely rejected, you’re facing a situation where you’ve either failed to make the case for the product or service … or your product and service has no market.

The last part of my statement is a fairly common occurrence. I’m seeing start-up, early stage, and mature businesses that have no real offer; they have a product or service that truly has no market. Or such a small market they can’t possibly make a business of it. Yes, their product works. Yes, they have invested a lot of time and energy in the development. And yes, in some cases they’ve secured outside money. But the reality, evidenced by their continual lack of success, is there is no market for what they have to offer. “

Jim goes on to give five tips for testing your product or service if it is not selling, to determine if it has a wide enough appeal. It is good advice.

Of course, all of this illustrates that sometimes business trends can be taken to extremes. Having a product or service for which there is no market is the dirty underside of niche marketing — or the Long Tail if you wish to use that terminology.

Many small businesses are making a go of it through a niche-focused business model, and in general it is a good thing to focus on a niche. Just make sure the niche is not too narrow, the market too small, the tail too tiny.

1 Comment ▼

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

One Reaction

Win $100 for Vendor Selection Insights

Tell us!
No, Thank You