|The Small Business Library|
June 22, 2000
Boom Market or Niche Market? Which Is Right For You?
So the obvious question is, "If 95% fail, why do you and I continue to follow the crowd?" I guess it is just human nature to do what everyone else is doing. I guess they call it "Keeping Up With The Joneses." But if Mr. Jones usually fails, why in the world do we want to keep following him?
The same type of thinking seems to hold true in business. Right now there are tens of thousands of millionaires being created on the internet, but 95% of online businesses are still failing. It's not that the opportunity is not here, it's just that 95% of people fail at everything. That's the way the world works.
Without losers there would not be winners. Without small business people like us there would be no Bill Gates. Not that we're losers, it's just that we don't win often enough. :-)
But the honest to goodness fact is that people jump like lemmings on everything that they think will make them rich. Very few people understand that it is not the product that makes them rich but it is the person inside of them that will make them successful.
So the question is... Is there really any such thing as a boom market? Sure there is, but there are a few things that I have learned about boom markets and the biggest one is... You must be prepared to be twice as competitive in a hot, emerging market.
In a boom market you really see the separation of "the wheat and the chaff," unlike what you will see anywhere else. The competition is twice as tough in a boom market...
There may be less pie to go around in a competitive, emerging market
Everything boils down to simple mathematics, let me tell you how I got crushed in a hot market, because the same thing may be happening to you right now.
For over a decade people have been talking about the millions of baby boomers and their buying habits. It would seem to reason that you could make a lot of money by simply marketing to this segment of the population. Yes and no...
What the experts don't tell you is that the big games attract big game players and the competition is overwhelming in these markets. I had been selling dietary supplements for about 3-4 years. There is definitely great market potential here, but...
Would you believe that my sales kept going down instead of up? Why? Well I am not sure if there is one simple answer but I have decided that there is one major factor. That factor is competition.
In a hot market everyone wants a piece of the pie and soon there is less pie to go around. In the nutritional industry it seems that the number of competing companies grows faster than the number of new product users, and that is bad news. Soon you have more and more companies competing for less and less consumers. The pie is being divided into too many pieces, and that is a recipe for failure for smaller companies (like myself) who can get squeezed out by the bigger companies.
So the lesson is simple. If you plan on entering a hot market, like many of the internet segments, you had better be prepared for massive competition. If you are not prepared for this then perhaps you should consider a niche market.
Niche markets are normally ignored by the majority
If you don't have fire pulsing through your veins like many of your competitors maybe you just need to find a good niche market. By establishing yourself in a good niche market you won't have to worry about the hundreds or thousands of competitors you would have to beat in a hot expanding market. Most markets expand over time anyway, unless you are working with stone age ideas, they just don't expand as quickly. But again, that's OK if the competition is light.
Let me give you a couple of good examples of niche markets that I recently came in contact with. In my nutritional business I was looking for ways to promote locally, door to door. I didn't want to actually do door to door selling, just pass out some literature. I had a good piece and I just wanted to find some of those plastic bags to hang on doors.
I went to a search engine and looked for door hangers. I found a grand total of one company that sold the bags I needed. Guess who got my money? There are thousands of companies that sell the same products I was selling but I could only find one that supplied "door hanger bags." And my guess is that my competition was buying from the same company. What a niche!
The other thing I looked for was "flyer distribution." I wanted to find other people across the country who could do what I was doing in Missouri, so I could expand. The funny thing is that I found only two companies that did this. Both were in California and both were actually out of business (but for some reason didn't take down their web sites). This brings the phrase "no competition" to a whole new level.
By the way, the nutrition companies kept creaming me and I have since started selling for a company called "Cajun Country Candies" which is truly competition free. This is another great niche product. I sell three times as much candy as I did nutritional products. Candy isn't an exciting product like weight loss miracles and cancer cures so most people don't care to compete with me. That's OK, their loss is my gain.
Everyone loves candy, even though most home business people wouldn't consider it as a viable product line. I've sold tens of thousands of dollars worth of candy in a few months and I am just getting started!
Never forget to factor in the competition
My best advice is to simply use your head. If everyone is selling "autoresponders," for instance, you need to find a way to carve out your own niche. If you don't feel you can claim a unique advantage in your market you must pursue another niche. Can you provide a better autoresponder? Can you do it cheaper? Can you offer unique features that your competitors can not?
Every widget has its day, but some of those days will last a long, long time if you just find yourself a good comfortable market niche.
The Author Dean Garrison is the publisher of "Revolution" and "Revolution Online." To get a free 3-month trial subscription to his offline print magazine called "Revolution" write: FREEREV, P.O. Box 347, Monett, MO 65708. You can also sign up for the free subscription online at: www.revolutionteam.com.