How Do I Find a Niche for My Business? The 5P Niche
How to find a niche with low competition: start with the people around you, the problems they complain about and the feelings they want. No market research tools needed.
People with problems need post feelings from a product that has unique selling points. That one sentence is my plan for finding a niche, and it covers the 5 P's.
Find the problems people face, solve them with your product, convince them with your unique selling points, and give them the feelings they're looking for.
1. People: know who you're trying to help
When we start a business, we're tempted to help everyone, to increase our chance of success. But that makes us look too generic, and our solution doesn't resonate with anyone.
Say who it's for
Before
All about you
- Tax Accounting Service
- Tax Refund in 1 Hour
After
All about them
- Tax Accounting Service for Students
- Tax Accounting Service for Young Professionals
- Tax Refund for Those Always on the Go
Many marketing guides ask you to research demographics: lifestyle, age group, interests and habits. Unless you have a marketing analytics tool or a pool of data, you wouldn't have a clue what these people are like. I use a simpler approach that's closer to home.
Three ways to find your people
| Where to look | |
|---|---|
| Proximity | Yourself, those around you, and those you interact with every day |
| Place | The suburbs and locations where your customers live |
| Project | Something people want to achieve, like a hobby or improving the house |
Proximity. I have a wife and 3 boys. So my first customers could be a mum with lots of boys. My second could be young children staying home with mum, and my third could be my work colleagues. You know these people, you understand them and you feel them.
Write down the people you meet every day
- Myself as a kid
- Myself as a teenager
- Myself as an adult
- Mum
- Young mum
- Dad
- Dad in his 50s
- Children
- Spouse
- Grandparents
Place. People in a richer suburb can pay more, but they'll also expect more, and your product needs to match what's already targeting them. People in regional areas may have more trouble with travel, so they might be more likely to pay for something that reduces that hassle.
Project. A project has a definite goal, and people need to do something to reach it. The easiest way to find one is to think of something you want to do, because a lot of people like you may be thinking of doing the same. It could be sewing and fabric crafts, remote control cars or card games.
2. Problems: listen for the complaints
This is why we start with people like ourselves. You know the problems you're facing, and the extremes people will go to in order to solve them.
“When we had kids, we went to the extreme to get them to sleep. We bought all the books we could, asked people who'd had good results, bought toys, tools and treats, and made a chart of when the baby should feed, sleep and play. We really wanted to solve the problem.”
Three ways to spot a problem
- 1
Listen to the groans
What complaints do you hear from people around you every day? What problems do you face yourself in your projects, work, relationships, money and hobbies?
- 2
Think in time and periods
Take renovating a house. What goes wrong when you buy the paint, mix it, paint the walls and wait for them to dry? Each frustration is an opportunity to help other people.
- 3
Think in place and space
When you visit a place, what problems do you see? What problems are other people facing there?
What I learned
The ice cream boat
In summer we often visit a toddler beach. Every now and then a boat pulls in and sells ice cream from the shore. It's not cheap, but it's the only ice cream there. We can only take the kids on sunny days when we're free, so we want to make the most of it. And what's better than a sweet, cold ice cream under the hot sun?
3. Post feelings: what they want to feel afterwards
People buy products from you, but more importantly, they buy the experience your products bring them. Before you rush to create something, think about how your customers should feel after using it.
A honeymoon island resort
Before
Feelings to avoid
- Exposed
- Seeing familiar faces
After
Feelings to give
- Romantic
- Free
- Secluded
- Tranquil
I once asked a young married couple why they booked their honeymoon resort. They said it was because nobody there would know them. So a hotel manager could consider selling a total privacy package. Romance and tranquillity would each lead to different products and different branding.
Tip
Look within yourself too
What do you feel before, during and after using products already on the market? A friend told me he loves eating at McDonald's because it reminds him of his childhood, when his parents were still together. He goes back for that feeling.
4. Product: think out of the box
Apart from physical products, you can also sell services and digital products. Think about a patient going to a doctor.
One doctor's visit, many products
| Type | Example | |
|---|---|---|
| Prescription | Product | What the patient actually paid for |
| Next check-up | Service | A follow-up visit |
| Specialist referral | Service | A referral to another specialist |
| Checklist or app | Digital | A printable checklist, or an app that monitors symptoms |
| Email series | Digital | A subscription to exercises that help reduce the pain |
Will people buy it? Validate the product before you manufacture, source or create it. The key is to find the fastest and most cost-effective way to see if people will accept it.
Ways to validate your product
- Look at Google Trends
- Look at online marketplaces and competitors' negative reviews
- Do SEO keyword research
- Use the Mom Test
- Create limited or free samples and get feedback
- Create an online listing or ad, with a landing page and a call to action
- Create an email with a free offer or registration
5. Unique selling points: 10% better is enough
When you tell people about your solution, they'll ask, “How is it different from anything else I've seen?” If you're the only solution on the market, simply tell them. If you have competitors, you need to dig deeper.
Two ways to stand out
- 1
Do the opposite of your competitors' negative reviews
If people complain that a product doesn't have certain features, build those features into yours.
- 2
Offer the experience that's missing
Our honeymoon guests expect privacy. So design the rooms for privacy while keeping good views and access to the hotel's amenities, or offer a private wing with only 5 other couples and 2 in-house staff.
“If you can make your business 10% better than your competitor, you will have buyers.”
So don't think of crazy unique selling points. Keep them simple: just 10% better than what's already on the market.
About the author. Bach Ly is a software engineer with 17+ years building websites and applications for teams at Cochlear, CommSec, Pepper Money and ResMed, and now builds web applications and online integrations through KoalaDigital. More about Bach.
