3:  How to identify your niche market?

I know what you are thinking about – what do I sell online, how much will I earn, what products do I need, … Stop, Stop, Stop!!!  This is the mistake which most people make – First look out for the people/niche market and not the product. 

Why should you look out for the people/online niche market and not the products?

Let's say you are in Africa where the temperature is upto 45^o  – now you have some great woolen  sweaters.  You have them in plenty … will you make any money.  Not a single chance, you are selling something which people don’t want.  Always, look out for a group of people who is in search of a solution for a particular problem – once you know the problem you could find out the solution quite easily.  Taking Africa as an example again, if the people’s problem is hot weather – a possible solution could be cool drinks, ice creams, swimming pools, …  This group of people with a common problem, we call them as niche market. 

Identify your online business niche market

Niche market is a small group of people who share some common characteristics and who are in search of a solution to a common problem.  Once you know your online niche market, you could formulate strategies satisfying the wants of the niche market and making money through them. 

Steps in finding online business niche market

Step 1:  Assess your strengths and determine what areas of life you are most interested in?  Think about your hobbies, your specialization, what you do in the office, skills you have (like painting, photography, …), … - as a starting point you can think about art, auto & cycles, business, children, cuisine, crafts, entertainment, fashion, health and fitness, home and gardening, lifestyle, men, news, photography, political, religion, science and nature, sports, teen, travel and vacations, and of course women.  Focus on something which you really enjoy doing. 

• Find out the hottest search trend from Google Zeitgeist – http://www.google.com/press/zeitgeist.html.  This will provide you with a indication what people are looking for in the internet.  We are just looking for ideas, if you come across a hot topic – note is down
• Checkout http://pulse.ebay.com – Ebay Pulse is a great website to find profitable niches.  Checkout what people are dying to buy on the web, you might come up with a very profitable niche.  eBay also puts out a PDF report of their hottest categories each month, available at http://pages.ebay.com/sellercentral/hotitems.pdf
• Other useful site you many want to checkout for business ideas à http://50.lycos.com, http://buzz.yahoo.com
• Do a search in the search engines with the keywords such as “top 2008 online business”, “business ideas”, … and browse through the relevant sites to identify people’s problem.  Top search engine includes http://www.google.com, http://www.yahoo.com, http://www.live.com, http://www.ask.com

Step 2:  Identify the wants of the people in your niche market.  Now that you have few good business ideas, your next step would be to find out what exactly people want in the particular sector/business you have chosen.  Once you know what the people want, you can come up with a product/service which fulfils their wants.

• Look out for relevant online communities and monitor what people are frequently discussing about.  Social networking sites would be a good starting point, top social networking sites includes http://www.myspace.com, http://www.zorpia.com, http://www.peopleconnection.aol.com, www.friendster.com, http://hi5.com, http://my.yahoo.com, http://www.facebook.com
• Discussion forums are getting more and more popular – they serve as repository of information.  Checkout the forums related with your niche market and find out what people are discussing about.  Say for instance you have chosen photography as your niche market – search the web with keywords “photography + forum” and you will find good forums.  Before considering spending some time on a particular forum, checkout how many members they have, frequency of activity, etc.  There is no point in spending time on the discussion boards which does not have any visitors.
• You could also check out business news related with your topic, identify the experts and read their blog’s, read reports, read books, etc.

Step 3:  Assess the online business niche market:  Good, now that you know what people want, find out the potential/size of the nice market you identified.   At this point you may want to know your competitors, the number of customers, current product/service offering, etc. 

• http://www.amazon.com – Amazon is a great place to see what currently exists for any given sub-niches.  Do researches on what products people buy the most, the top selling books, etc.
• Find out what keywords people use to find out solution to there problems.  I cover keyword research in detail in a separate article, just to get you started checkout http://www.googspy.com (type a keyword relevant to your market, and find out the competitors and related search terms)

Step 4:  Find a solution to the problem which is underserved and serve the market well.  Most people underestimate the potential of identifying a good niche market.  That’s the biggest mistake made by many Internet Marketers.  Niche is going to be your starting point and you will be spending valuable time on the niche you choose to target.  If you make a bad choice with your niche - I hate to mention, you probably see yourself working harder everyday without much results or earnings. 

What is not a niche market?

When your customer base is too large it’s not a niche market. For instance golf, doctors, 65+ age group, … might look like a good niche at first, but guess how many doctors are their in this world and how many websites are helping them out - there are literally millions of website trying to attract your customer base.  Niche market is something where there is not much competition.  When there are websites offering help to the customer problems then there is someone who already found the niche - if you can provide a better value carry on otherwise look out for a better niche.

Narrowing your focus on a small niche market gives you the following advantage

1. There is way less competition

2. Small niche markets are much easier to dominate.

3. You will be the only source for the products, so your customers will visit you more often.

4. Provides you with a more targeted customer base – you can write targeted sales letter and promote more products based on the shared characteristics of your customer base and hence the conversion rate will be much higher.

Summary of online business niche market

• Identifying a good niche market will be one of the most crucial step in your online career
• Niche market is a small group of people who share some common characteristics
• Steps in identifying your niche market – determine your area of interest, identify the wants of the people, access the potential/size of the market, choose a market which is underserved and serve it well