There are two main types of business niche, with variances between the two from one end of the spectrum to the other.
Business A is the one that sells thousands of product lines to a wide variety of customers. Business B is the one that has narrowed its focus to a very precise customer base consisting of far fewer potential clients.
Business A sounds like a better bet because it can reach far more people than Business B, but for a start-up Business B actually has some significant advantages.
What you will read in this article:
Business A Model: Broad
Imagine you open a hardware store in a large town, which you’ve invested a lot of time, money and effort into.
You have a sound business plan, a creative marketing strategy and an excellent range of products at reasonable prices.
How could you fail? Well, you are facing a barrier that can be very difficult to climb over, namely the fact that there are three other hardware stores in your locality, all offering much the same service at around the same price.
Why would customers go to your store when they are used to going to one of your competitors?
Then there are the customers who buy most things online and don’t visit their local store at all. You are trying to serve a mainstream need that many people have, and you’re one of many doing the same thing.
It means your marketing strategy must be broadly focused and extensive to reach enough potential customers and persuade them to visit your store.
Business B Model: Niche Market
Now imagine you set up a business specializing in drills. You have the widest range of drills and related items such as bits available, and you have the expertise to match.
There isn’t a service like yours in the whole local area, and possibly the entire country. You are only appealing to people who want drills, which is one of the thousands of ranges in a hardware store, and therefore your customer base is correspondingly narrowed.
However, that also means your marketing will have a similarly narrow focus, and rather than a broad brushstroke approach to marketing you’ll be able to target your campaigns very precisely at potential customers.
For example, instead of having to bid for many different hardware related keywords on Google AdWords, you’ll be able to bid on the word drills alone.
If you use an SEO company like DanMatt Media, they will be able to focus on some very specific keywords in the optimization strategy, and this means that you should get a better return on your investment.
It’s all about market share and target customers, and the statistics related to each.
A wide-ranging offer will be seen by many more people, but only a small percentage will be interested or likely to buy from you.
A narrowly focused offer will reach far fewer people, but a far higher percentage of them will be interested in buying from you.
When you are starting out in business and have limited budgets for marketing, a highly specific niche will be easier to develop and expand, so this makes it a great choice for new start-ups.
To select business model A vs. business model B is always a difficult decision and depends on your own mindset, on which market you operate in and on what terms your business enters the market with.
Question: What do you believe? Are you in favor of broad or niche market as the best model for start-ups? You can leave a comment by clicking here.