Having your own business is one of the best investments you can make. However, coming up with a good product or service can be difficult. If you’ve heard about niching, then a niche franchise market might be the best option for you.
The question is, what is a niche market, and how will it benefit you in a franchise?
Niche market: what is it?
Have you ever heard of the expression, “jack of all trades, master of none?”
That’s what you get when you try to do everything without any specialization. On the other hand, you can do one single thing and be considered as an expert in that field.
That’s what niche market is all about.
It’s positioning yourself as the expert, the specialist, the go-to person or brand, or simply put, the authority for a specific audience.
When you do this, you establish your credibility over the competition. You become instantly recognized by your market as the source of authority. In fact, there are countless of niche markets that are profitable.
You can also take advantage of operating in a niche franchise market.
Niche market explained
But before we go to niche franchising, let’s try to define the niche market first.
According to the Economic Times, a niche market “involves a specific target audience with a specialized offering.”
That is, a niche market usually supplies a unique need.
Examples of a niche market
To further understand what a niche market is, here are a few examples for you:
Market: women’s shoes
Niche market: plus-sized shoes for women
Market: pet owners
Niche market: all organic products for pets
Market: health and wellness
Niche market: gluten-free products
Niche market: digital nomads
Niche market: adaptive fitness for people with special needs
If you take a look at it, tapping into an untouched niche market has the potential to bring you more profit than just being a “jack of all trades.”
Niche markets can also be determined by the following:
Price: luxury, affordable, discounted
Demographics: income level, age, gender
Geographics: city, state, neighborhood
Quality: premium, handmade, economic
Psychographics: values, interests, attitude
With a niche market, you can give your business a competitive edge even from the get-go.
Interesting? Here are some more benefits of operating in a niche franchise market.
It’s perfect for starting small.
If you’re thinking of starting your own business, starting small is not too bad, especially if you happen to have limited resources. A niche franchise market allows smaller companies to survive since they don’t have to compete with larger companies that are already in the mass market.
Do more effective marketing.
Because niche markets serve a specific clientele, you can focus all your resources on reaching the said customers and getting them to try your product or service. This results in more effective marketing efforts, which is harder to accomplish if you’re in a mass-market competition.
Another benefit of operating in a niche franchise market is that because you only target a segment of the market, you have a lesser competition to think about. Those in the mass markets like large companies, are not really interested in “segmenting” their products and services. With little to no threat of competition, you have a higher chance of breaking even with your business.
But this is where you must be careful. Since you have a limited clientele due to niching down, it’s best that you make yourself visible in front of your target market. Also, it goes without saying that your preferred audience is significant. If not, then you may not be able to make a profit – at all.
This brings us to our next point.
You might think it counterintuitive for a niche market to gain much profit with a limited target audience.
But if you do it right, you can have a lucrative business even in the first year because you did your research and have proven that there is a need for the product or service that you are offering.
Just think about it.
Having little to no competition at all means that you can sell your products or services at much higher prices. If there is a demand for what you are offering your customer base and the supply chain is limited, then high prices are to be expected.
Consumers are even more willing to pay even if it’s expensive, especially when your company offers products or services that are exclusive or tailored fit to their needs.
Higher and better brand loyalty
Of course, if you’re the only one – or one of the select few – offering a product or service that caters to a specific market, then you have a higher chance of gaining brand loyalty at a really high rate. That is, satisfying your customers will immediately make you their favorite provider of the product or service that you are offering. You become more than just a supplier. Instead, you become their partner in achieving their goals or the results they want from acquiring or using your product or service.
It’s like hitting two birds with one stone, too. The same loyal customers can also spread the word about your product or service to their friends and family for you. This, in turn, becomes a form of free marketing for your business.
Overall, the mix of low competition and quality service is more than enough to immediately forge a strong relationship between you, your company and brand, and your target customers.
Less Marketing Spends
Speaking of loyal customers who become avid fans of your products or services, niche marketing also makes it easier for you to market and advertise your product. Since your market is highly targeted instead of the general public, you don’t have to spend a lot on advertising to let people know about what you do. With this, you can maximize your ad spending to get the best and maximum results for your company.
You become the go-to authority.
As a niche market provider, you’d likely end up the so-called expert in your field of choice. That is, serving a special market or offering a special product or service will challenge you to become the expert in what you are doing. It might not be easy, but in the long run, you can build your authority and credibility and get more people to trust you, your brand, and your service.
Avoid the pitfalls of niche markets.
Operating in a niche franchise market has a lot of benefits. At the same time, there are pitfalls that can be dangerous for you and your business if you’re not careful.
To be aware, here they are:
Limited growth opportunity.
Since niche marketing is specific to the certain target market, your opportunity to grow and expand your business might be limited. This is why it’s important that you do your research and go with a market that is profitable enough, even if it is limited.
New competition can be tough.
Becoming the first to offer a product or service to a niche market is a great opportunity to make a profit. However, you won’t be able to avoid the rise of new competitors, especially if your chosen niche is gaining more and more attention in the community. To make matters worse, having new competitors in the business can be tough because then you have to think of ways to continuously innovate and improve your product or service to maintain and sustain your brand offering.
An ROI may not be guaranteed.
A direct opposite of the benefit your read earlier, a niche market may not always be lucrative. That’s why for the nth time, you need to make sure that while you serve a niche market with a smaller clientele, you should make sure that your product or service is really something that is needed, useful or relevant to earn good profits.
Overall, the benefits of operating in a niche franchise market outweigh its pitfalls. Still, it is best to venture into a market with solid demand for a niche product or service to ensure profitability and the possibility of scaling and growing your business in the long run.
If you would like to learn more about owning a rewarding Special Strong franchise, we encourage you to reach out to us today for more information.