Wherever a topic exists, there are bound to be misconceptions about that topic, and niche marketing is no exception. Of course, misconceptions are harmful, because they propagate false ideas. So, in the interest of squashing incorrect ideas about what niche marketing really means and bringing the truth to the forefront, here are some of the most stubborn and common misconceptions about niche marketing (and the real facts behind them).
1. “A limited audience means limited profits.”
This is a misconception which seems logical — key word being “seems.” After all, if you have a small audience, they simply can’t buy as much as a big audience, right? In fact, the profit you turn depends on an entire laundry list of factors that extends far beyond the sheer size of your target audience. While a niche audience may be smaller than a broad audience, other factors come into play where revenue is concerned.
Consider the cost of a given product (or service). Luxury goods are a prime example of this, because what lacks in quantity can be balanced (or even exceeded) in quality. Think of it this way: Ferrari may not sell as many vehicles as Toyota, but it takes a dozen Toyotas to equal the cost of a single Ferrari. Luxury niche markets pack more for the punch.
Keep in mind, luxury doesn’t necessarily have to mean “prohibitively expensive.” After all, there are levels of luxury: Starbucks is luxury compared to Dunkin Donuts, and millions of people still buy it.
2. “Bigger is always better.”
Many marketers think that the more people you can sell to, the better. However, when you stretch your offerings too thin, you run the risk of overshooting your mark and not appealing to anyone. As we’ve discussed in the past, broad can be bad. A niche market gives you the advantages of a built-in, captive audience that already wants to hear what you have to say — and a willing audience is a buying audience. Furthermore, the more you specialize, the less competition you have to shout over in order to be heard. The less money you have to spend on advertising, promotion, and undercutting your competitors, the more money you have to funnel into — well, everything else.
3. “Product expertise isn’t important.”
Outsourcing is a big part of commerce — fair enough. But you still need to know enough about the product or service you’re offering to be able to effectively and convincingly communicate with your customers in the long term. Once it comes to light that you’ve misunderstood or even misrepresented your own wares, it can be next to impossible to bring your reputation as a savvy and ethical businessperson back to full health.
The one exception to this rule would be a “beginner” niche (e.g. cooking for beginners, stocks for beginners, etc.) where you won’t be expected to dish out information packed with quite the same level of precision and detail. Still, if you do choose to break into a niche you know little or nothing about — even at the “beginner” level — tread carefully.
If you would like to find out more about defining your niche
If you would like to find out more about boosting your niche I invite you to contact me. I have been helping professional service providers such as CPAs, attorneys, and financial services providers focus their business development efforts on profitable micro-niches for over 10 years. Email me at firstname.lastname@example.org.