Wednesday, February 04, 2009

Finding your Niche

Wal-Mart HermosilloImage via Wikipedia

In my last entry I talked about staying ahead of the competition and the importance of having a niche. Since it has been some time since I talked about your niche today I will go over what a niche is and use an example to hopefully get your mind working on ideas to find the right one for you.

Basically a niche is the part of the market you go after.

Using the big retailers for example, Nordstrom’s niche has always been its customer service and return policy. People do not go to Nordstrom’s for low prices but for the service and the outstanding return policy. Target’s niche is being a step above Wal-Mart in quality.

Now look at the office supply market. The three major competitors are Office Depot, Staples and Office Max. So what sets them apart from each other? Well you could say that Staples with their “easy button” but many people don’t even remember which store that comes from. The problem with these three stores is that they are not separating themselves from each other so most people either shop at the most convenient location or the one that they have the best experience in.

So let’s assume that you want to open an office supply store and you have to figure out what your niche is going to be. First of all, if you are going to carry the same things the other three stores do you are not going to be very successful because there is no reason for people to shop at your store instead of the others except for convenience or if there is neither of the big competitors in the market.

Now let’s look at the three major areas of the office supply store and see where you can set yourself apart.

One of the big departments in office supply stores is electronics. However, consumer electronics is extremely competitive and there is very little money to be made in them. In fact you may sell a $500 all in one and make $20 dollars profit.

However, instead of selling the basic consumer electronics all the office supply stores sell, you could look at items they do a poor job selling and don’t have much of and that is higher in electronics. If you are looking for a good business copier, specialty printers, or other similar items, the big office supply stores just do not have the inventory or the ability to service this market. However, something you would need to take into consideration is that people who buy these items need excellent serving so how are you going to offer that?

While there may be more mark up in furniture, the big stores have the advertising dollars to pull people in. A majority of people rather get a cheap price than buy something quality by paying a few dollars more. But there is the market for quality and you may not sell as many pieces as the big boys, but you could go for a market that makes you more money in the long run. Once again people spending the money want service, what are you willing to provide? Design services? Set Up and building? That is something you would want to consider.

Finally there is the main office supply area of these stores. Once again you cannot compete by offering the same products they do and in general it is hard to look at having higher end products. However, if there is a big enough market you could consider selling the items that the other stores don’t carry in their inventory but have to order. You could find out from local businesses what items they cannot find in the big stores and work on bring customers in on those items plus having the everyday items.

What it all comes down to is what part of the market you are going to go after to set yourself apart form the competition. It does you no good to try to fight them head to head because you will loose. Find out what the customers need and what the big boys are not doing to satisfy their needs. The better you set yourself apart from the competition the more successful you will be.

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