It’s much easier to attract the attention of a smaller market demographic group than it is to market to the masses, particularly if the targeted market segment is known to have a strong interest in your services or products. Carefully choosing who to market to is a basic requirement that underlies any efficient marketing effort.

Niche marketing, as it’s sometimes called, is used by companies both large and small. By targeting select customer audiences, businesses narrow their focus to maximize the effectiveness of their marketing dollars and produce better results.

Some companies exist almost entirely to serve a niche, while others are more broad-based, creating different products to appeal to a variety of specific niches. Either way, seeking out prospects with specific needs and specializing in meeting those needs can help differentiate a company.

Not sure what your company’s ideal niche is? This proven five-step approach can help.

1. Assess your strengths. List the products or services in which your company excels. What’s special about them? What value or unique skills does your organization offer? In what areas is your company an expert? Which of your current customers does your company most enjoy servicing? Look for patterns that can reveal what your organization does best. Most niches surface naturally. They emerge from an organization’s already established interests, experience, and know-how. A former stay-at-home mom now a career coach, for instance, may discover a natural niche by specializing in helping mothers return to the workplace.
   
   
   
2. Define and assess the potential market. Companies must determine whether there is a legitimate need and a market size worth pursuing. Survey your potential customer base and identify any unfulfilled needs. Explore ways to tailor your products or services to meet their needs. By definition, niche customers are a narrowly defined group, so it’s important to make sure they have a genuine interest in your offerings. Seek out trade groups or associations in a niche and create relationships. Talk to niche prospects to determine whether a niche idea or product will be viable.
   
   
   
3. Research the competition. Only by understanding the competitive landscape can you determine whether a niche is too narrow or too trendy (and thus not sustainable) or too broad to even be considered a niche. Assess any direct competitors and analyze their marketing strategies, positioning messages, and unique selling propositions so that yours will stand apart. Remember, it’s much easier to meet the needs of an underserved niche than to go head-to-head with an established competitor within a well-defined niche.
   
   
   
4. Test-market the idea. You’ve identified a niche and you’ve developed a product or refined a service in response. Now it’s time to see whether the whole initiative stands up. Take steps to gauge the market’s receptiveness. Offering free samples or consultations can help. 
   
   
   
5. Create tailored communication and vehicles.  Marketing messages and strategies must be tailored to your niche. This should be the easy part, since you’ve already invested the time to get close to what your niche wants. Speak in the language of your customer and differentiate your solutions.

Niche marketing gives a company a greater opportunity to become recognized as an expert in a specific field. A formidable credibility factor arises, which often leads to stronger referrals. Choosing a niche doesn’t exclude customers from other demographics. It simply means that an organization has focused its energy on a core niche and isn’t expending excessive resources marketing to tangential groups.