Finding a market niche that you know and understand, and that has committed customers ready to buy your products can go a long way toward making your business stand out from the crowd at craft shows and online.
What is a Marketing Niche?
In marketing, a niche is a small sub-segment of a group. So, for example, instead of making handmade soaps that appeal to all people, you might focus on handmade soaps that are all organic and appeal to environmentally conscious people. Alternatively, you might make handmade soaps with ingredients that are not harsh and have healing ingredients that appeal to people with sensitive skin.
Outside of marketing, we sometimes use the word "niche" to refer to something that a person is ideally suited to. For example, if we were talking about someone who, at work, has found the perfect role within the sales department of a company, and her job is an ideal fit for her skills and interests, we might say, "She really found her niche in sales."
It's wise to look at niches from that perspective as well. So, you're not just looking for any subset of your larger market, but you're looking for a subset of your larger market that you know and love and can serve their needs better than the majority of people.
Finding a niche means coning down the focus of your business so you are targeting a smaller subset of a group, and you understand and serve the needs of that group so extremely well, they can become passionate fans of your company.
Mastering a niche makes you special. The soap maker who makes soap that is gentle on sensitive skin will stand out from other, more generalized soap makers. Her soaps might not appeal to everyone, but when a customer with sensitive skin discovers that her soaps are soothing and healing, she will have a committed customer who will come back for more and recommend her to anyone she knows who also has sensitive skin.
Serving a niche well connects you with a group that is passionate. Done well, it can turn you into an ally in their special area of interest. Don't think of it as ignoring a broader range of people, instead think of it as becoming incredibly special and valuable to a specific group that you can serve extremely well.
There's a company that makes homemade jams, dip mixes and nut butters that regularly sells at a craft show in my area. I have always enjoyed their food, but fairly recently my younger son was diagnosed with a peanut allergy, and I discovered this company's nut butters are all peanut free. Everyone in my family loves almond butter, but, where I live, it is very difficult to find almond butter that doesn't carry a risk of cross contamination with peanuts.
I had been a casual customer of this company before I had a child with a peanut allergy, but now that they serve a specific niche need of mine, I'm an enormous fan.
Instead of casually buying a jar of jam from them at a craft show, I stock up on plenty of jars of nut butters when they are in town. If I know they will be at a show I'm attending, I will earmark some of my spending money for them before I even get to the show. I sought out a local store that carries their products and made sure the store owner knew why their nut butters were special. I have ordered from their online store. And I tell every peanut allergy-affected family I know about their products. Plus, I have an extra warm fuzzy feeling about the company because I am grateful that they understand and are meeting a need of mine that most companies do not meet. That's the difference between a casual purchaser and a committed customer.
When you're selling your crafts online, compared with selling at craft shows, you have a much larger group of potential customers that you could sell to, but you also have a much larger group of competition.
One excellent way to stand out from that competition is to serve a particular niche extremely well. So, you might not become the hottest soap maker on Etsy, but you might very well become the hottest soap maker who sells gentle, healing soaps.
Narrowing down your focus means you don't have to compete with all of the soap makers online, you just have to get your product in front of people who are looking for a very specific type of soap. And because the number of potential customers is so large online, you can really narrow down your focus and still have a large enough customer base to build a viable business.
When you go looking for a subset of the larger group you already serve, you'll do best if you choose a group you know well and feel passionately about.
One of the keys to successful niche marketing is that you are able to serve the needs of people within that niche in a way that no other business can. You need to really know their needs, and motivations to buy. If you grasp the ways they are not being served in a way that only an insider would understand, and then you meet those needs, they will be wildly impressed by your company.
Also, if you are already an insider in your niche, you will have connections and contacts who may be able to open doors for you within that niche.
I figure, if you're going to make something, you might as well make something that sells for a good price. It often takes just as much time and talent to make a lower priced item as it does to make a higher priced item, so you might as well pursue the higher priced items.
This strategy isn't fool-proof, but it can give you a starting point when researching niches.
Go to Etsy and search for the broad category of items you make. Now sort your search results by price, highest price first. Remember the first row of search results on Etsy are sponsored results, so start looking from the second row.
Take a look through the search results, and ask yourself several questions to analyse what you see:
Think through what has been done to earn those higher prices, and ask yourself whether you could replicate that. I'm not saying you should copy another crafter on Etsy. I'm saying ask yourself whether you could make your own unique products that serve that higher paying niche. Could you do it better than current sellers on Etsy? All the better if you can!
Do be careful about outliers, that is prices that are way above the price of other similar items. You need to look for a group of similarly priced items and assess the qualities that make the artist able to sell them for that price.
Also, just because items are priced a certain way, doesn't mean they are selling well. Once you've found a group of well priced items that is in a niche that you think you could serve well, click through to a few shops of people who are already selling similar items on Etsy for a more in-depth assessment.
Look for the Shop Info section and click on the number of sales. That link will show you what items have sold and for how much. Click through to several of the listings in several shops that sell the higher priced items and look for patterns. What it is about these items that command a higher price when compared with the lower priced items in the same category? Also check out how long the store has been on Etsy; that will give you an idea of how many sales have been made in a specific time period.
This research doesn't guarantee that if you just post similar types of items (with your own unique design, of course) on Etsy you will automatically make the same level of sales. People who are making lots of sales are typically doing plenty of promotion are well. However, it does indicate that the product you have in mind does have a market, and with the right promotion you could make healthy sales.
You can also look up keywords within your specialty in order to determine what people are searching for online. The terms people are using to search for your items online can give you some insights into more specialized products that have a customer demand.
WordTracker is a useful site for getting keyword information that can help you find a niche market. You'll need to create a free online account (there are also paid accounts, but the free version should suit your needs), then you can type in several keywords someone might use when searching for your type of product online. Keep it fairly broad at first, you can always narrow it down if you need to, then see what comes up.
WordTracker will provide you with a list of keyword phrases related to you keyword that people use to search online. Within that list, you might find a gem of an idea for a viable niche.
I don't use WordTracker much. Instead, I use a keyword searching tool from SiteSell, the company I use for building my online business. SiteSell is not free, and it is not just for keyword searches (it's a whole suite of tools for building an online business). You would subscribe to SiteSell if you want to commit to building an online business (the keyword search tool is just one of many tools they provide). If you're just casually checking out keywords, then WordTracker will be fine.
Finding a Market Niche for Your Craft Business