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First Step To Product Marketing Success
When you start by answering the question ‘how to sell a product to a niche market customer segment’ you open the door to many more questions.
Your product must provide value to each and every customer. It may be the greatest invention ever. However, if you don’t communicate how you solve a problem for the user, it’s not going to sell.
Value is defined by the problem your product solves, the price the customer is willing to pay and the benefits your product provides over competitor’s products.
Different people value different things.
A young man may purchase a high-performance automobile for the image it portrays to his peers.
A slightly older man with a family may purchase the same car for the safety it provides.
Two similar people who value different things.
Segmenting your audience by what each segment values is how you sell a product to a niche.
What Is A Product
So that we are on the same page, here is how a product is defined.
A product may be something tangible such as a car or a bottle of wine.
It could also be a service like an investment account or a carpet cleaning service.
Or, a product may be a marketing concept, such as a bundled package offered to a unique audience. An example is a business credit card account that offers special interest rates, loyalty points and discounts at partner companies.
Does Your Product Provide Value
Like the car example stated above, your product may provide value to different prospective customers in many different ways. To sell a product to a niche, it all depends on the different values your niche may focus on.
For example, one may consider a carpet cleaning service for the personal benefit of saving time.
Secondary values prospective customers may consider are:
- The service benefits derived from customer reviews, and
- The brand image benefits perceived from a marketing campaign.
A cost-benefit may be the time saved to allow them to do other things.
The mental and physical energy cost savings, from not having to deal with doing the work themselves, are also things to consider.
It’s not just the product people pay for, it’s the many other things that add customer value to their lives.
This is known as the cost/value equation. Consumers are always measuring the value they receive over the price they will pay.
7 Building Blocks To Define A Niche Market
1. Who Are Your Consumers, Users, and Other Market Participants
Your target customer is a person who buys your product.
Having an understanding of the customer’s needs and values is the basis of a marketing effort.
However, there are other factors to consider when you sell a product to a niche. Identifying the buyer as a customer is important. Determining who will ultimately be the product user is also good to know?
Product users may be defined in many ways.
The end user is the person that benefits from a product the customer purchased.
For example, a parent purchases a computer for their child to use in school. Who do you market to, the buyer or the user? The answer is, that depends? Applying the 7 building blocks may reveal some theories to test.
In the tech world, users are people that interact with a company through digital media or technology.
A company buyer may purchase a Customer Relationship Management (CRM) system for its marketing and sales force.
Here the buyer will need to consider the needs of the end user. The buyer and the user may need to be marketed to differently.
Market participants are people such as brokers or traders that act on behalf of consumers.
Stockbrokers are an example of market participants. They are the middle people that ultimately sell to the buyer. Marketing to the broker and the buyer may require different strategies.
2. What Is Your Customer’s Buying Process
The buying process begins when the customer determines they have a need.
But, does one really have a need for an eighty-thousand dollar car?
The customer’s need is relative to your product offering and the customer’s attitudes, values, and budget.
Customer value is how they perceive what they are getting for a product or service relative to its purchase price.
When a person determines they need a new car they begin to evaluate the many different product attributes they may require.
By way of example, the typical buying process for a car purchase may be:
- How different car brands are perceived by the consumer
- The marketing messages they have seen
- Research information available from Brands, consumer reports and other market participants
- Auto dealership visits
- Purchase action
If you are marketing a product, every step of the buying process should be investigated to move the customer along the road to purchase.
Customer Journey Mapping, helps you have a fundamental understanding of each step the customer goes through by diagraming their unique experience with your brand.
Buying Process Disruptors
Industry disruptors such as Tesla Inc. looked at the standard automobile buying process and decided to change it by eliminating dealerships.
Changing the market participation structure, and selling direct to consumers saves the consumer time, money and stress.
Along with other disruptive product attributes, these changes to the buying process adds significant consumer value.
Another example is Amazon. The online distributor disrupted the retail world. They changed the buying process for many brands and industries.
Reviewing the buying process for your product and streamlining or changing it may make a significant difference in how your niche responds.
3. Are There Direct and Indirect Competitors
A direct competitor is a company that sells identical products or services in the same market as you.
An indirect competitor is a company that sells a product that is not the same as yours, but its products or services could satisfy the same consumer need that you slove.
Evaluating The Competition
- How competitive is the performance of your product or service against competitors products or services
- What features of your product or service is most important to the customer versus the competition
- How do you translate those customer-focused features into benefits that will motivate the customer to buy
While doing an in-depth competitive analysis will help you focus your niche marketing, there are always unknown indirect competitors to be aware of. For example, Taxi drivers in major cities were doing well until ride-sharing startups disrupted their world.
Performing an ongoing Tend Analysis will keep you sharp and aware of potential disruptions in your product sphere. Looking at trends and opportunities, along with having a willingness to adapt, will keep you ahead of the competition.
Trend Analysis Questions To Consider
- What’s different today about the niche markets you serve
- What may be different in the future
- How may these changes influence your products or services
- What are the trends taking place in your industry
- What are the trends taking place in your customer’s lives, businesses, or society
4. Identify Competitive Market Strategies
Your strategy is the foundation of your competitive advantage. It represents your game plan to succeed in the current business environment.
Like you, your competitors also have unique features that appeal to a market niche.
What is your competitor’s core business strategy versus yours? Do they market based on:
- Customer benefits
- Technological advantages
In the Tesla Inc. example, the brand looked at its competitor’s market strategies. Tesla developed what they market as a technologically advanced car, directly to the consumer.
They took on the categories of quality, technology, and service and outpaced their more established competitors in these categories.
Situations change rapidly in today’s fast-paced world. Yes, Tesla had surpassed competitor’s offerings, but they have had some setbacks along the way. Rest assured Tesla’s competitors are watching to see if there are any fails in the brand’s value promises to grab a piece of their niche.
5. What Is The Market Share of Competitors
Market share is tricky to identify if you are not in an established industry.
I work with small business in medium-sized cities. We often have to do a ‘questimate’ to determine the size of the potential market and estimate the share we believe competitors have.
We use all available data to come up with a reasonable benchmark, and we add to the data as new information is uncovered.
Even established industry participants, with well-defined market share numbers, still have many indirect competitors to be aware of.
Competitors using different sales strategies are ready to disrupt and pounce on any opportunity to attract your customer base to their brand.
With these thoughts in mind, it’s always a good exercise to determine your share and set some goals to grow share among your selected niche.
Southwest Creates A Niche And Grabs Market Share
Always do a trend analysis and look to see what’s not on your radar.
An example is the launch of Southwest Airlines. This startup focused on short flights, Their market niche were people that drove 300 miles for business or leisure.
Rather than drive, ‘experience the convenience of a fast and inexpensive flight’, was the selling feature.
The major airlines didn’t see the startup as a threat. They traditionally moved passengers longer distances.
Southwest expanded. By connecting short-hop flights they began stealing share from the majors. Competitors took notice and changed their business model to compete.
Now you know why you can’t get a direct flight anywhere.
6. Define Distribution Channel Structure
Distribution channel examples may include retailers, wholesalers, brokers, distributors, and the Internet. It’s defined as the intermediaries through which goods pass through.
Setting up a deal to pass through an intermediary, that is frequented by your ideal customer, is a big win.
I had a client that worked as a food broker, he knew the ins and outs of the food distribution business. He had also trained as a chef.
He left the food broker business to start a small organic food restaurant. His knowledge of the healthy food consumer niche, and the food distribution business, paid off.
We worked with a packaging plant to box his organic line of soups, in an environmentally friendly container. He eventually secured a distribution deal with Costco.
Ways To Sell Online
The sales techniques you use to approach a distribution channel are very different from selling to the consumer.
The benefits that will grow consumer sales need to be sold to the intermediary, along with how the distributor will benefit from the arrangement.
If you are a small business that chooses to sell online, setting up ordering systems, merchant accounts and shipping may all be arranged using a CRM program.
Affiliate programs or selling your product through Amazon, Etsy, Facebook, Google, and other online merchants may be a good way to establish your distribution channel.
Marketing to your niche audience and driving them to the distribution channel is still your responsibility.
Often the distribution channel arrangement adds to your value proposition. Take full advantage of it.
7. Investigate Key Environmental and Economic Factors
Similar to the Trend Analysis example, awareness of the current business environment will either raise red flags or identify opportunities.
Business environment factors include being aware of recent developments and future trends in the demographic, cultural, political, regulatory, and technology advancement areas.
How Cultural Change Launched An Industry
The growing acceptance and rapid expansion of legalized marijuana is an example of how external environmental change created an industry.
All of the above factors played a part in the acceptance of the product. The need for tax revenue became the economic driver for change. Local regulations were adapted to speed the launch of this industry.
On the flip side of this trend is the threat of the lack of acceptance by the federal government,
The science community also has a concern about the long-term impact the product may have on users.
An astute investor I know looked at all these factors and saw an alternative opportunity. He invested in the development of more regulatory acceptable CBD based products. Working within the political system, he saw an opportunity for long-term growth that will not be subject to potential threats.
Get Rich On A Niche
In my experience. marketers will take above steps one through six very seriously. When it comes to evaluating environmental and economic risks, many chose to ignore them. They roll the dice. Some get rich on a niche. Often their decisions come back to impact their efforts and they must adapt.
The moral of this building block category is If an issue raises a red flag, deal with it.
Conversely, if you see an opportunity that provides a competitive advantage from your understanding of business environment changes — Go For It!
“The aim of marketing is to know the customer so well, the product or service fits them and sells itself” – Peter Drucker