Reading time: 5 – 6 minutes
“A niche market is the subset of the market on which a specific product is focused. The market niche defines the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact. It is also a small market segment.” Wikipedia
In a general sense, there are two types of markets, commodity and niche. A commodity market represents a single solution to a single problem and is sold to a general audience. A niche represents a solution or solution set to a group of interrelated problems which is sold to a specific audience.
Quick show of hands. Who is in the United States? You just lost the commodity war. In a global economic situation, where we are competing with nations possessing lower labor costs and fewer costs due to regulation, the best economy of scale will falter. If you are going to survive over the next several decades you must firmly establish yourself into a niche market.
Entrepreneur Magazine offers seven steps to defining a niche which are:
- Make a wish list
- Describe the customer’s worldview
- Go for it!
While the article represents a very sound approach, I am a major fan of the idea that complexity is the enemy of execution. Let’s see if we can follow Tim Ferriss’ approach and make this a bit simpler to master. Ferriss takes a simple, four step approach to mastery:
- deconstruct a skill to its essential parts,
- select the most valuable factors to learn,
- choose the optimal sequence, and
- set stakes to motivate you.
For those with some time
The first thing to start with is the heuristic
A successful business can be defined as a self-sustaining organization which is paid to solve problems for other people.
The bolded portion represents the business model. We further refine this to paid to solve a set of problems for a specific subset of people. Let’s follow Tim’s model and deconstruct:
- Specific subset of people. What demographic do you have the greatest affinity for? What demographic do you understand already at a deep level? What demographic do you believe could benefit the most from your efforts?
- Set of problems. What problems does this demographic have which may intersect? Don’t limit yourself at this stage, think in the frame of any problems.
- Solutions. How could you use your skills and deep knowledge of this demographic to solve multiple problems at the same time?
- Which solutions have the highest value to the demographic? This determines the price you can charge and gives you a priority order. Remember, you’re in business to make a living. If you aren’t profitable, it’s called a charity.
We have deconstructed seven steps into four clear steps or questions, representing the first three of Tim’s steps: deconstruct, select, sequence. The final step is “set the stakes”. Any process that is used is better than the perfect one that isn’t used.
Here is my challenge to you today. Complete the four steps. Give yourself no more than two minutes per section. That makes this an eight minute exercise.
Come up with whatever you can in that short period of time and we’ll work with it. Next time, we’ll talk about testing ideas.