Choosing a market niche is a key factor for the success or failure of a digital product, besides being an important strategy for the whole development of your action plan.
That’s why we have come up with some tips that will help you choose a niche for your first digital product, aiming at the rentability of your digital business.
What is a market niche?
A market niche is a segment with specific characteristics and an audience with a particular profile and interests.
If you analyze major brands such as Amazon, Wal-mart and Macy’s, you will notice that they all work with a wide range of products and services, which means they can engage different audiences. With this business model, it is possible to reach a 20-year-old who’s interested in fitness gear and a 40-year-old housewife who’s interested in household appliances.
However, if you take the make-up brand Sephora, for example, you know it is a company which focuses on beauty products, with a much more specific target audience: women who like wearing make-up.
Going a bit deeper, we can mention Eleiko, which makes barbells and platforms for athletes and professional who practice crossfit. Very specific, isn’t it? In this case, the group of people who are interested in the brand is a very small one, but because it offers a singular product, the brand ends up being very assertive.
A market niche also has as its objective to explore new markets and meet the demands from those who still haven’t attracted a lot of attention or strong competitors.
What are the benefits of working with a market niche?
If you wish to start a business and you are looking for a market to act in, you:
A) Think it is more viable to enter a market that is already explored, but in which you can sell many different products to a broader audience, or;
B) Find a segment that has not yet been very explored, and try to become an authority in this branch, offering ideal products for the moment of your audience’s purchase.
Unless you have a major investment behind your new business venture, I am quite sure you have seen a great opportunity in option B.
One of the main advantages of working in a very segmented market is the lack of major competitors, since specific niches are not very explored.
Moreover, you have the chance of being a pioneer in a market that has not yet identified new demands from a specific audience. And speaking of pioneering, there’s also the possibility of creating a new demand and then offering your solution to a new audience.
If there is one or more suppliers of a product or service, it is much simpler to generate competition, especially if you can offer more quality to your audience.
You can map your buyer persona thoroughly and understand the behavior of your ideal customer. This research will affect the product itself, your customer service, your marketing strategies and, I dare say, the whole business. If your audience feels that you understand them and that you speak directly to them, they will feel safer buying from you.
Now you know the advantages of working with well-segmented market niches, let’s learn how to choose yours.
How to choose a market niche
1. Broaden the possibilities
Creating a digital product on a subject you like is certainly more pleasant. However, if your objective is to start making money online, you should focus on finding a profitable niche that is in tune with your abilities.
Listing the subjects you have greater affinity for is the first step, even if they are not your favorite subjects, but you feel it is possible to develop a material about. Also, think about information you or someone you know have looked for and couldn’t find satisfactory results, either because there was none or because they lacked the depth you wanted, always having keywords in mind.
Keywords are words or expressions used in search engines such as Google, to find information. They can be general or specific, referred to as “long-tail”, and act as an information niche. For example: if you are looking for information on “marketing”, you probably will type in “marketing” and then analyze the results you get until you find what you are looking for. However, if you already know what kind of information you need, you will search for something more specific, or a long-tail keyword, such as “email marketing” or “content marketing”.
2. Assess Offer and Demand
With the list of potential topics on your hands, start a research on keyword tools from the most common search engines, like Google, about the demand on the selected subjects, paying close attention to similar searches to what you intend to create, in both quality and quantity.
These tools will then show you the number of monthly searches, both locally and globally, for the keywords. One of the best tools to check for niche demand is Google AdWords Keyword Tool, but you can also rely on Keywordtool.io and SEMRush as well.
Use the tool to analyze the demand on the Internet for the product: is there enough demand for it? How often are the main keywords searched for?
Also, verify if there are similar products being sold in the websites that show up in the results when the keywords are entered, and, if the answer is yes, analyze the competition.
Combining demand information with knowledge about the competition, you will be able to analyze how viable each of your options is. It will be ideal if you can choose a niche with high demand and low competition.
3. Understand the trends
There will always be people looking for healthier habits, ways of losing weight, how to make money online, solutions for relationship problems, working out and doing sports, as well as the latest trends and fashions.
If your idea is on one of the latter, you’re halfway there. However, because they are trends, you will need to go deeper and make your idea more specific. There is always a lot of demand for trends, but, then again, there are also a lot of offers, and being one in the crowd will not make you a rich person.
That’s why it is essential to research more and more until you find something that is unique and choose a niche with higher demand and lower offer. And to do so, there are tools that can lend you a helping hand, such as Ubersuggest, in which you type in a generic term and you get suggestions of keywords related to the term in sublevels, according to real searches.
Google itself can help you there. When searching for a term, the engine automatically suggests some phrases based on statistics. These may be great ideas for market niches.
To make the best decision about the suggestions, use Google Trends. With this tool, it is possible to make a comparison between keywords, and you can see the best option in a graph.
4. Evaluate if you can compete in this niche
As important as choosing the best market niche is to evaluate if you will be able to compete in this segment. What makes your product stand out, what makes it better than the ones available in the market?
Don’t be discouraged by what’s being offered in the market. If the market niche you have chosen already has its “best-sellers”, don’t worry. See this as an opportunity (if there is a lot of sales, then there’s also high demand). But having something that sets you apart from the others is essential. If it’s not the case, get back to the research.
This kind of work is meticulous and requires a lot of research, analytical examination, and dedication. But we are quite sure that, with these four tips, you will be able to choose your market niche much more easily, besides increasing the chances of investing in a highly profitable business.
What about you? Do you know any tips or tools that can help you when it’s time to choose a niche? Share your thoughts with us in the comments section below!
Take this opportunity to learn how to become an online authority starting from scratch!
Note: this post was originally published in April 2013 and has recently been updated to provide more complete and precise information.