Roy and Ryan Seider were Texas brothers, outdoorsmen who loved fishing and hunting. Roy had a business selling customized boats designed for fishing in the shallow waters of the Gulf Coast. The customized boats were outfitted with three coolers, including one that doubled as a casting platform.
Dissatisfied with the quality of the coolers they were using, the Seider brothers wondered if they could create their own. They eventually flew to the Philippines in their search for a manufacturer who could make the cooler they dreamed up. This cooler would be tough enough to stand on when casting from a boat as well as able to endure the mistreatment that outdoor gear routinely suffers during its owner’s adventures.
The cooler the brothers designed was not only rugged, with one-piece molding and grizzly-proof locks, but it kept ice cold longer than other coolers. After building a prototype, the Seider brothers ran into a problem: to make the numbers work, the cooler’s retail price would need to be $300. This was a cooler like no other, and it had a price to match!
Roy and Ryan Seider had a unique product that they believed in. The product solved a problem in the market. Now they needed to find people willing to shell out a then-unheard-of amount of money for an over-the-top product that they called the Yeti Cooler.
Yeti wouldn’t make it as a company unless it could find a market niche. A three-hundred-dollar cooler wouldn’t sell at Walmart or Target. Even the outfitter Cabela’s didn’t sell any coolers this expensive.
The Seider brothers figured that people like themselves—avid hunters and fishermen—were the customers they needed. To reach this market niche, they sold their coolers through hardware stores, tackle shops, and trade shows. An advertising agency helped Yeti reach more of their ideal customers by hiring hunting and fishing guides as “brand ambassadors.”
Over time, sales began to grow, and eventually, they took off. Now they sell other products besides coolers. In 2020, Yeti sales reached $1 billion. But it all started with a market niche whose needs and desires exactly matched what Yeti had to offer.
What is a Market Niche?
In the preceding articles in this series, we learned about researching and profiling your industry, your company, your product or service, and your customers. Following these steps provides the knowledge and intuition that you need to define the ideal market niche for your company. You are looking for the intersection of your strengths and an acute market need.
A niche is a subset of a larger market, often defined by demographics such as age, income, gender, or location, or by psychographics such as goals, values, and worldview. A market niche can also be defined by the specific needs of people in that niche; for example, people with certain health needs require gluten-free or dairy-free foods. FedEx overnight service serves the needs of businesses in the United States who need to get time-sensitive documents or other items to a destination tomorrow.
For example, a fast-food restaurant might define their market niche like this: any family or worker passing within 5 miles of our location.
A family restaurant might have a more limited target market like this:
- with children between ages 5-12,
- living within a 15-minute drive of our location,
- with an annual household income of $60,000+,
- who care about the nutrition of the food they eat.
Defining your market niche includes not just knowing who you can serve best and who will appreciate your business the most. It also includes knowing who your product is not intended to serve and the types of customers that are not a good fit for what you do.
If you can’t look at your product or service and answer the questions “Who is this for?” and “Who is this NOT for?”, you need to define your market niche.
When Yeti started, they didn’t try to sell their coolers to casual hunters and fishermen or people who bought hunting gear at Walmart. That wasn’t their niche. They didn’t try to sell their coolers to vacationers or weekend beachgoers, though these markets use coolers too. Yeti’s market niche consisted of real-deal, passionate, professional outdoor people. Later, Yeti began trying to reach farmers and ranchers through rural feed-and-seed stores. As the brand grew, they expanded their market to include people who enjoyed outdoor sports like snowboarding and mountain biking.
Here are some examples of businesses with market niches:
|The Business||Who Is It For? (the Niche)||Who Is It Not For?|
|PCBE||Amish and other Anabaptist businesspeople||CEOs of public companies|
|Stable Hollow Construction||Landowners with a vision for restoring the old barn on their property||A farmer needing a new equipment shed|
|Carhartt||Outdoor workers||City office workers|
Benefits of Defining Your Market Niche
Finding and focusing on your niche allows you to become a master of your trade instead of being a “jack of all trades, master of none.” Because you are a master, you can do better work for your customers who come to depend on you as the expert or the go-to source in your field.
When serving a market niche, you stand out by offering something different than other businesses in the broader market. This reduces the competition for everyone and gives customers better options for finding the product or service that fits their needs best.
Marketing to a niche versus trying to reach people in a broad category helps you save money on advertising. You’ll immediately rule out certain marketing channels because they won’t help you reach your ideal customer.
Your messaging will be focused and potent because you can speak to a specific group of people about the specific issues they face. For example, Carhartt makes durable clothing for outdoor workers. The current headline on the Carhartt website reads, “Built to Get Stuff Done Outdoors.” The messaging on the website uses words like hard-working, tough, job, sweat, rugged, work, durable, and protect because these words resonate with the people in their niche. The photography of jobsite scenes increases the impact of the message.
A deep understanding of your market niche helps you make better business decisions. For example, Joe, the owner of a rental company, was developing pricing for a specialized piece of equipment. He wondered, “Would our target market prefer a lower rental price with the requirement to refill the fuel tank before returning it? Or would they prefer a slightly higher rental charge in exchange for the convenience of not needing to refill the tank?”
Joe realized that the equipment would often be rented to companies that would not keep a gas can on hand. He knew they would rather pay the higher rental price than deal with the bother of refilling the gas tank. Joe’s thoughtful tailoring of his services to the niche he serves is one of the many reasons his customers enjoy doing business with him.
Knowing the needs of your market niche helps you save money in product development because you don’t waste resources on developing products that your customers won’t use.
Defining Your Market Niche
At Rosewood Marketing, we ask our clients the following questions to help them define their market niche. Remember, this comes after they have done the research and thinking to profile their industry, their company, their product or service, and their customers.
- Why do people buy from you instead of your competitors?
- Why do people buy from your competitors instead of you?
- Are there other reasons people should be buying from you?
- Describe the customer that gets the most value from you.
- Does this match any of your personas?
- Number these items in order of importance to you: quality, service, price.
- What elements come together to create special value for your ideal customer?
After you have answered these questions thoughtfully, work on a short description using this template:
[Your Company Name] serves [description of ideal customer ] with [service/product solution] so that [outcome/customer benefits].
Try to keep it general enough to cover all personas but specific enough to define your ideal customer and why your product/service is the best choice for them. This becomes your Niche Statement. Here is an example for an imaginary business:
H. M. Enterprises serves parents and caretakers who care about instilling traditional values with simple and engaging toys so that their children can achieve the most benefit from their playtime.
Writing Your USP
Your unique selling proposition (USP) is related to your market niche. A USP is a feature, quality, or service you provide which is different from what your competitors offer. Domino’s Pizza has found success in delivering pizzas faster than the competition. Their USP: “Fresh, hot pizza delivered in 30 minutes or less, guaranteed.”
Every successful business has a USP even if they have never written it down. We believe it is helpful to write your USP as a statement that encapsulates the primary reasons people do business with you. You can often take your Niche Statement and rework it in customer-facing language to state your USP. For example, based on the Niche Statement for H.M. Enterprises (above), we could create this USP:
Your children deserve the gift of real play with real toys that build imagination, social skills, and influence positive character.
Your USP becomes the foundation of your messaging, which we will discuss in the next article.
The old quote says, “When in Rome, do as the Romans do.” This axiom is good advice for adapting our business to our niche customers. Grow your business by identifying and developing your specific market niche.