We have discussed how to start a cosmetic private label business. The cosmetic market is huge with many people selling similar products. How can you stand out of the pack? The answer is niche marketing.

What is Niche Marketing?

A niche market is a subset of a larger market segment on which a particular product or service is focused. Essentially it is a highly-researched targeted marketing plan that focuses on one particular section of the market that has high potential to connect with the offered product or service. Niche marketing delineates product/service features, production qualities, demographics and price range to satisfy specific marketing needs. Instead of casting as wide a net as possible in multiple-platform marketing, niche marketing zeroes in on strategically selected venues and media platforms that have high concentrations of these targeted consumers, allowing the marketer to develop products or services that directly fulfill the wants and needs of that specific, narrow group. The narrower the niche, marketing experts say, the stronger your business will be, as long as you choose the right niche and target market.

The better you are able to define your market, the higher the likelihood you can hone your marketing message to resonate with this specific market, turning that segment into fans that will buy and rave about your product to others. This highly specialized targetable marketing strategy, aims to make your business thrive in a day and age of competition from numerous super-companies.

Before continuing, you need to understand that there is a difference between your target market and your niche: Your target market is the specific group of people you will provide services or products for e.g. working teenagers, dog owners in the city, sculptors, drone users, and brides to be, etc. Your niche is the product or service you specialize in offering to your above target market. For example, you can offer trendy and attractive drone carrying cases. It is the combination of target market and specific service that creates a niche market.

There are business owners (usually newcomers) who are anxious about utilizing niche marketing because they are afraid of alienating or leaving-out certain market segments. They might also think that by choosing to build their business on a narrow niche, they will make less money. But these worries are actually incorrect and in fact it the opposite is true, for example:

A friend of mine, who is a yoga instructor, offers yoga classes for women age 60-80, who are either disabled or recovering from surgery or an accident. This is a great niche because woman in that category have special needs and want to work with someone they feel they can trust and who will understand their specific situation. Their desire for instruction has many emotional concerns accompanying it, and they will be less likely to hire someone who seems like a generalist or works with everyone. They don’t want to end up in a yoga class with young fit people who are for more physically capable than they are. If this instructor refused to name her specialty and her focus, not only would she not attract the specific women she wants to work with, but she would not stand out among her many competitors. She would just be another instructor. By stubbornly refusing to focus, many new entrepreneurs and small business owners dampen their own success.

 Who Uses Niche Marketing?

Companies of all types and sizes, and entrepreneurs effectively use niche marketing strategies in their overall marketing campaigns, but it is an especially useful strategy for smaller companies or individuals with limited budgets and products or services that are targeted toward a specific segment of the market.

Large companies and organizations that offer products and services that are widely used and mass marketed often still use niche marketing techniques. Many major cosmetics companies, for example, now offer more natural products that appeal to niche segments of the market- health conscious people who care for the environment. They focus in on that smaller segment of their market with high visibility in the stores, magazines, and online sites frequented by this type of cosmetics consumers.

Before a company can implement a niche marketing strategy, they first attempt to answer important questions that will guide their ongoing efforts regarding that narrow segment. Are their product choices more likely to be influenced by word of mouth or advertising? What magazines does the targeted niche read? What websites do they frequent? What radio stations do they listen to? What social media sites are they most likely to be active on?  Once the targeted niche market has been researched thoroughly, the marketing strategy can be developed. Every aspect of the strategy, beginning with the look and feel of the branding on through to the marketing tactics employed (brand ambassadors, event sponsorship, advertising, giveaways), is tailored to the preferences and sensibilities that were discovered during the initial research.

Niche marketing is always more effective when reaching consumers who can be targeted based on certain characteristics, such as demographic, occupation, commitment to social or political causes, or hobby, etc. Some examples of customers who could be the focus of niche marketing include: Inner city youth, young professionals, extreme sports enthusiasts, car hobbyists, photography aficionados, and vegans.

Niche Marketing Does Not Limit You!

Won’t I pigeon-hole myself? Don’t worry, once you are known for a certain niche, and have plenty of clients, you can grow from there. You can either offer additional services or products based on the actual needs of your client groups. For example a personal-care products company can focus purely on creating organic face cream, and expand into soaps, shampoos etc. A toy maker can begin with one innovative toy, and then expand to others that both complement and go along with that first toy or even some completely different plaything.

If you’re smart, you’ll utilize the customer feedback to help you improve what you’re currently offering and design new products or services. You can even join forces with local entrepreneurs or businesses that can complement or help advance your business. Working with partners can help lighten the load on your shoulders, especially if they are professionals in fields that can be helpful.

Who Can Best Benefit From Niche Marketing?

As stated above, all types of companies and individuals can utilize niche marketing, but there are two common situations when it’s really worth it to find/create a niche market and target it aggressively:

1. Launching a New Business: New businesses looking to carve out a profitable place for themselves in a competitive landscape can use niches to first get established.
2. Working With a Tight Budget. If your company doesn’t have a large marketing budget, or if you prefer to invest that money elsewhere in your company, you’ll almost certainly have better luck aggressively focusing on a small market segment instead of spreading your efforts too thin across a bigger market.

The Advantages and Disadvantages of Niche Marketing

Advantages

Blissful Simplicity- You can focus on one product/service and simplify your business.  This is a perk on many levels. It will allow you to focus your energies on building up your brand from the ground up with a minimum of distractions.

Passion Inspires Passion- If you choose a niche that you’re passionate about, you’ll enjoy meaningful work and it’ll be far more fulfilling for you. Your passion will inspire passion in others, and they will be excited to buy your product or service. You’ll also attract like-minded people, as customers or potential partners, that you’ll enjoy dealing with.

Easily Identify and Target Potential Customers- Because the pool of people you are looking at is much smaller, it will be easier for you to identify potential customers with whom you can be more targeted in your marketing efforts. Your marketing strategy will be more personally appealing to them.

You Won’t Be Spread Too Thin- Stating that ‘everybody’ is your potential client market will spread you too thin. Focusing will help you to concentrate on a specific group of people, and what their specific wants and needs are. These are who you need to please and attract, after all, they are who will pay for what you provide. Utilizing market research, you will be able to figure out what is important to this specific market segment, what they like and don’t like, what ages, genders and races they tend to be, etc. You can develop products or services specifically for this group, based on your increasingly thorough knowledge and understanding of what they require and desire. Avoid making the mistake of “marketing to everyone, selling to no one.”

Become an Expert and Well-Known in Your Niche Faster- It is far simpler to research a smaller market and become an expert in it. Understanding the market means you are able to identify the unique needs of your potential audience, provide new and compelling products, tailor your products in the right way, communicate efficiently with the target group and identify how you will position against your competitors. If you’re already an expert, then you have the opportunity to perfect your skills and make use of your knowledge. You can distinguish yourself as an authority in the field, the product, brand, website or service to turn to, and by having this distinction you will help prospective customers find you. In this smaller target market, you will gain the trust of your customers and build up loyal clientele and customer referrals quickly, raising your profile amongst them.

Higher Pricing, Higher Profits– When your marketing niche is clearly defined, you can make sure to stay focused on selling to customers that are the most profitable. You can also charge more as a specialist in your field. Anyone can sell a spoon. Maybe your spoon is made with biodegradable materials, and also includes a small salt-and –pepper shaker in the handle for the environmentalist on the go! Limited or specialist products/services means buyers expect to pay more. What you’re offering is special, and will carry a higher price than a generic product that is widely available. Your production cost per unit may be higher for specialized products, but you can recoup their losses by setting a price point that reflects the exclusive availability of your product along with the production costs.

Flexibility=More Repeat Business- As you can market and provide an increasingly better service or product, based on your client’s requirements and feedback, the chance is that you will get more repeat business.  Consumers will come back for more, and often will start spending more with you as the relationship and trust grows. It’s much easier for you to roll with new trends and change your site/product./service to market the latest and greatest to your focus market.

Cost-Effective- With niche marketing, you won’t be mass producing general ads for a wider audience; you’ll be zeroing in on your target market with pin-point precision, allowing you to significantly cut your marketing costs. You’ll be marketing to potential consumers who have a special interest in your offering, and are thus likelier to acquire what you offer with less effort on your part. For example, if you are offering a service for a selected demographic, you could advertise the service using a local media, so that your marketing budget can go a lot further, allowing you to use a more comprehensive media mix.

This is a type of marketing where you will rarely throw away money hoping for returns. You do not have to flood multiple platforms with generic marketing material; rather you focus on those platforms that are utilized or frequented by your target market, and appeal to what they want. With this approach, you will be able to reach a larger percentage of people who are more likely to use your services or purchase your products. It saves money and time that you can invest in the company’s development.

Deal With Less Competition- Unlike in generalized marketing, niche marketing usually has less competition for the viable customers purchasing the products. It may sound counterintuitive to try and sell to a smaller amount of people, but if you can find a market segment that exists at the intersection of high demand, high potential profits, and low competition, niche marketing to them can really increase your odds of success. Niches usually go un-targeted because smaller companies are focused elsewhere or are unaware that the niche even exists, and larger companies often do not think targeting a small niche is worth their time and money.

Companies that do target these under-served niches will have the opportunity to establish their brand in a less crowded playing field. This will give the company better positioning against new competitors when they eventually arise. If you provide specific services or create specific products for specific people, in a specific way, you won’t be easily replicated and replaced!

Become A Search Engine Star- With less competition, more unique offerings and some smart SEO, it should be easy to rank in the search engines (and in less time). The niche marketing here means that though there are less people searching for your keywords, those that are, will find you!

Personalizing Your Marketing- Having a highly specific audience lets you customize the messages to speak directly to your target market, and you won’t have to worry about whether they will understand certain buzzwords or innuendoes. Your message won’t be lost on those it matters most to, regardless of the platforms and mediums of advertising you utilized. Having a target market also allows you to write, publish and promote content (ad, blog, flyer, website, social media, etc.) that is more effective. When you’re advertising for a niche market, you’re able to focus in on what matters most to your audience, providing them with answers, solutions, and advertisements that mean something to them and resonate with them.

Establish Brand loyalty- Businesses can build their brand loyalty by utilizing niche marketing, because this marketing approach lets you provide customers with products and services they need and desire. You can appeal to them personally and show off your expertise in the field. By paying attention to feedback, you will build a closer and longer-term relationship with customers that will keep them coming back and enhance customer loyalty.

Disadvantages

Limited Growth Potential- The niche marketing strategy may not be suitable for long-term growth, as niches may not eventually provide adequate business. With such a narrow market, it can be difficult to expand without losing your vision.

Possible Customer Confusion- Niche markets can only grow so far and going beyond will entail new target markets and a broader appeal to a bigger market. Few businesses are happy staying at a status-quo, and generally look to expand. This could lose customers if they start to get confused by the brands direction and if it starts to fall away from the core business.

National Brand Invasion- The niche market you’re targeting may at some point be invaded by large companies with larger marketing budgets and the ability to mass produce the niche product cheaply, and if you’re company relies solely on having few or weak competitors, this might quickly cause your company to fail. Unless you can establish a strong and sustainable brand name within your niche, you will eventually face serious challenges from larger companies who will diversify into the niche market with their products.

Niche Riskiness- Similar to the disadvantage above, if your company’s survival depends solely on a niche, and the expansion and growth of your company depends solely on the expansion and growth of that market, you can quickly find yourself in trouble. If a company cannot encourage significant consumer interest in their product then the long term profitability of the company will be compromised. So you need to research properly and hope whatever you’re aiming for isn’t a passing trend or fad.

Missing the Mark- Despite your best efforts, there is no guarantee that you’ll be able to properly figure out who your customer base is, what they want etc’… You might narrow your focus too much, and it could be missing out on potential customers, which can lead to less profitability. This is why it is so important to conduct extensive research on the target group prior to launching and to prepare for a plan B if the market does not respond as you hope.

Final Thoughts

Different marketing strategies exist to suit the particular needs of different businesses. Whether you have a private label business or selling your own homemade cosmetics understanding the advantages and disadvantages of these various techniques is essential in formulating a good marketing strategy that will best suit you and your company.

If you’re a small business in a highly-competitive market, niche marketing can certainly be the way to go, but don’t rush into niche marketing if you are not prepared. Think carefully if this is the proper strategy for your business, and be prepared for serious market research. By doing so, you’ll be able to better understand the market, size up the competition, identify the unique needs of your potential customers, provide new and compelling products, tailor your products in the right way, and communicate efficiently with your target market. If you employ niche marketing wisely, it can help strongly establish your product or service, and launch you on the path of success.