The following article is an expert from an eBook that I have developed entitled “Creating and Marketing your Online Business: A DIY Guide to Strategic Internet Marketing for Beginners“.
What is a Niche?
Every business occupies a particular niche. It is the niche that focuses the activities of that business. The wider the focus of operation means more competition in that niche. The more competition that exists, the more aggressive and strategic the marketing will have to be. With a narrow, clearly defined niche, a business can easily dominate that particular area of business.
Existing companies that move into the online world already occupy a particular niche. By examining their existing operations, including product and service offerings, companies can easily identify their niche. However, success in a “brick and mortar” setting does not guarantee success in an online business environment but does provide some competitive advantage in having pre-existing supply chains and distribution centers that can be leveraged in an online environment.
The internet allows almost any new start-ups to enter practically any market and offer any range of products and services to a global market if a need has been identified within a particular niche. By becoming focused in one area, a start-up has the capability to become extremely aggressive in gaining market share. In fact, identifying profitable niche markets and dominating those markets through optimized sites has become the driving force behind making money online.
Keep in mind that “Creating and Marketing Your Online Business: A DIY Guide to Strategic Internet Marketing for Beginners” is a guide that will concentrate on identifying new opportunities from scratch and developing those opportunities through proven practices of optimizing websites to attract customers.
The first strategy for making any money online is correctly identifying prosperous and profitable markets that are in need of products, services or information. These markets must have enough prospects or customers willing to spend money. Once identified, this type of niche will be the most profitable, but will also be the niche with the most competition.
Some of the more profitable niches that have traditionally provided a high return and conversion rate include:
- Medical (including information on diseases);
- Loan, mortgage and debt consolidation;
- Web hosting;
- Internet marketing; and
- Cellular phones
The problem with these areas is the enormous amount of competition. Because these areas tend to pay well for conversions, most new online businesses that concentrate on these areas have a difficult time succeeding. The amount of effort required for any new start-up is too great and will often frustrate those entering the market.
A niche will typically be more profitable if there are obvious trends that exist in that particular market. For example, in 2008, the United States entered into a crisis with sub-prime mortgages. Many people were looking for ways to refinance existing mortgages, consolidate debt and restructure their overall finances to cope with ever increasing demands on limited financial resources. This niche became extremely popular and profitable during this time and still continues to do well for those dominating that area. A new start-up company entering this niche would be hard pressed to realize any successes without an extremely large effort backed by major capital resources.
The hotter a particular market, the more money in that niche. This means more people will have interest in this area, which in turn translates into more searches for information online. More searches typically will mean more potential traffic for an online business. Capturing and converting a portion of this traffic is the goal of an online business model.
It is important not to confuse conversion into sales. While for some online business models, converting web traffic will mean selling a product or a service, but for others it may not. Existing traditional businesses that are developing online markets will see a conversion as a typical sale of a product or service. However, businesses built around capitalizing on pure niche markets may not be selling any items.