Fish Where The Fish Are - Reasons Why Niche Marketing May Not Be The Best Alternative

Niche marketing seems all the rage these days, what with the continued phenomenal growth of small business enterprises. Countless numbers of business advisors and consultants continue to encourage budding entrepreneurs to find, research and develop niche markets as a means to guide their businesses to profit and success. I've published several articles on the subject of niche marketing myself. And, as a market sector, niche markets certainly have their place. There will always be portions of any given market that are ignored or rejected by the larger companies, or simply overlooked by other small businesses, making them ripe for the taking by savvy capitalists.

But niche markets are by definition, small markets; subsets of a larger market arena. As such, even though they may prove profitable depending on the niche, they will always have less profit potential than the larger market segment. So why not go after the larger market?

All too often, I think, small business owners get caught in the trap of thinking of themselves as "small" business. Because their origins (the kitchen table, the garage, the basement, someone's storage room) may be extremely humble, many entrepreneurs become captivated by their environment rather than their "vision". And, because they think of themselves as small, owners feel that they can't effectively compete in a crowded market or in a market where they face competitors that greatly outsize them. That's a huge mistake. Many large corporations, and some of the most profitable companies ever created (Yahoo, Martha Stewart Living Omnimedia, eBay), have had very modest beginnings. So for entrepreneurs to limit their expectations and future business potential based on their present circumstance or position isn't very smart.

Don't be afraid of entering a large marketplace simply because it's large. Large is a good thing. It means that there exists greater opportunities and potential for more players. And while the number and size of competitors will certainly be greater, that's not necessarily a bad thing. More competition means somebody's making money, otherwise no one would bother, so you immediately know that there's more profit potential. And the involvement of bigger companies often makes the stakes higher for them.

Large competitors have more, and often better, resources that are brought into the marketplace, however they're not always as "agile" as a smaller competitor. They're oftentimes unable to respond as quickly to customer interest or market changes. If you don't believe me, just take a look at what has happened in recent years within the automobile industry. The "giants" were too slow to change and adapt themselves to supply what the market demanded. As a result, they have suffered huge losses and endangered or lost their premier rank in the industry's hierarchy. In comparison with large organizations, small companies have their own advantages; less bureaucracy, a faster decision-making track, and ultimately less investment risk. If something doesn't work, it's much easier for a small competitor to make the adjustment or move on to something that does work.

Market Niche vs. Niche Market

Rather than trying to find a niche market, it may be more beneficial to use your resources to find your market niche. Don't concentrate on the market size, concentrate on your place in the market. Rather than focusing on a narrow market subset that requires highly specialized or customized products and services, consider larger market segments that offer more variety, flexibility and profit potential. Find a market that you're especially interested in or knowledgeable about. When you do, chances are you're not alone. You'll likely find that there are many others in the marketplace that have similar interests to yours and are searching for products or services related to that interest.

Remember, even large companies can't service every customer. Find out where your business can fit in to a larger commercial arena where more opportunity for growth and profits exists. Then find ways to distinguish your business from your competitors. Can your business offer faster service or a better quality product? Can you offer a customer service department where each time the customer calls they're able to talk to the same one or two people rather than being passed around to a different person every time they make contact? Can you provide “perks” that give added value to your products and services that provide your clients with exceptional customer experiences? These are ways in which you can compete against larger and more numerous competitors.

Competing against the multitudes or the giants can have its place. Against such competition, you grow smarter, stronger, better or you don't survive.

My grandfather used to say "I'd rather be a big fish in a little pond, than a small fish in a big pond". The lesson of course being that he'd much rather be the fish doing the eating, rather than the one being eaten. And, while I understand his viewpoint, I hold a slightly different perspective. I tend to lean more toward the example of the small baitfish who swim with whale sharks many times their size, and thus have whole oceans at their disposal.