A niche market is a focused targetable segment of a market. A business that is focused on a niche market is usually offering a product or service that is not being addressed by mainstream providers. In other words a niche market is a narrowly defined segment of potential customers.

Niche markets are typically ignored by large businesses because the market is too small to be interesting or to make their economies of scale effective. Niche markets are therefore ideal for small, specialised businesses. That is because these small specialised businesses can generally charge a premium or enjoy the benefit of little (or even no) competition.

So how do you find niche markets?

Finding niche markets involves gathering as much information about your market as you can. You want to know as much as possible about who the market, what they want from your product or service and how much they are prepared to pay for it. You can then use this information to divide the market into segments. For example you could split the market between male and female customers, customers aged 30 and under or over 30, customers with a disposable income in excess of $500 per month, customers in the USA and customer outside the USA and so on.

If you combine several of these conditions you’ll begin to define a narrow segment of your market, for example male customers under 30 with a disposable income in excess of $500 per month. Although you might want to add several more conditions to really narrow down your market.

But what if you don’t have a product or service yet?

If you’re still researching business opportunities then identifying a niche market and providing them with a product or service might be the business opportunity you’re looking for. So how do you identify such niche markets? Well here’s three ways you can start:

1. Consider your hobbies – hobbies are an ideal source of niche business opportunities and with the advent of the Internet it’s even easier to turn a niche hobby into a successful international business. Where it may have been hard to find other people that share your hobby in the past, it’s almost certainly a doddle on the Internet.
2. Think about your experiences – what have you learned from your life and how can others benefit from it. What problems have you faced that are unsolved. For example 20 years ago The Continuum Concept was a book that a few quirky parents read, now with the power of the Internet there’s a network of readers and passionate followers all of whom can be marketed to.
3. Review your skills – what are you an expert in? Be it Internet marketing, starting a business, football, music or bookkeeping there may well be others out there that could benefit from you expertise.

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