Fine Tuning Your Product & Service Definition
If you’ve spent any time looking at various programs for making money with eBay, you’ve probably come across the term ‘niche marketing.’ What exactly is niche marketing? Ok, dictionary definition time again:
Niche marketing is the process of finding small but potentially profitable market segments and designing custom-made products for them. Niche marketers are often reliant on the loyalty business model to maintain a profitable volume of sales.
Basically you’re providing a product or service that no one else is providing and people are coming back to you, which sustains your business.
Have you ever been to a live auction where there have been 2 or more auctioneers selling at the same time. More often than not, each auction ring will have something you want selling at the same time. It drives me crazy as I have to decide what item I want to bid on worse. Generally the item I choose ends up selling for too much and the one I missed out on sold for much less than it should have. Now let’s multiply the problem exponentially as we think about it from the eBay vantage point. When you look at eBay at any given time, they have a ton of auctions occurring simultaneously. Let’s suppose that for sake of argument at this very moment there are 10 million auctions happening on eBay. How do you, the auction attendee find the one auction having the exact item you want to see? As we all know, we generally use the search tool to locate items and then choose which one we want to bid on. Let’s suppose that the search tool wasn’t available
Let’s use the eBay categories as an example of what a niche is. If you are truly interested in pursuing the marketing of Electronics, then you probably need to narrow it down a bit further. If we search for “consumer electronics” on eBay using the category dropdown, eBay returns 318,973 items, with everything from Plasma TVs to Pedometers. So I believe it is safe to say that Consumer Electronics is not a niche market. In fact, the competition is quite large. So if you decided that you were going to sell haphazardly in the Consumer Electronics business, your results will be haphazard as well. Let’s see if there is a way to focus a bit. If you are selling something in the Consumer Electronics category, eBay offers you additional subcategories to help focus your product or service to a specific area. Let’s suppose that we want to sell GPS Equipment in Consumer Electronics. So using the same search tool in eBay, we search for GPS in the Consumer Electronics category and find that there are only 5,007 items. Significantly smaller than the 318,973, but still not a niche. So let’s take it one step further and look at GPS Tracking Devices. When we do the search for GPS Tracking in Consumer Electronics, we find out there are only 78, with about half belonging to the same vendor, and the other half composed of individuals running more than 1 auction. Even if we exclude the individual with about 40 auctions and search all categories for GPS Tracking, we still are only returned 72 auction listings.
Fine Tuning Your Product & Service Definition
So the idea is to start with a broad definition of a product or service you would like to pursue and then narrow it down until you hopefully arrive at what may end up being a niche market. Are GPS Tracking Devices a niche market? Probably, but again, you still have to be able to get them at a price that allows you to be competitive and make a reasonable profit you may need to further narrow down an area within GPS Tracking Devices to really be successful, and then of course, there has to be a market for the product.
Remember our definition of a niche:
Niche marketing is the process of finding small but potentially profitable market segments and designing custom-made products for them. Niche marketers are often reliant on the loyalty business model to maintain a profitable volume of sales.
The last part of the definition of a niche is “all important.” If you have a niche, it has to be a popular niche or your business will die. What exactly do I mean by that? Let’s take a really stupid and extreme example:
Suppose that Fred enjoys dynamite (Note: this is NOT a real life example. Any similarities to real life characters are simply coincidental). Fred loves to take it out across the road in his grandparents pasture and blow it up. Fred’s grandfather was in the mining industry for over 35 years and taught Fred everything he knows about dynamite. Fred and his grandfather have spent many a wonderful evening blowing up clumps of dirt, cars, wooden boxes, etc. You name it, they’ve probably blown it up. Fred’s grandfather recently passed away and Fred inherited over 100 cases of dynamite that Fred’s grandfather had conveniently collected from various mining exploits. Fred believes dynamite just might be a niche market. Fred does a quick search of eBay and discovers that he has absolutely no competition in the dynamite market. Fred thinks to himself, “I can even provide a newsletter that tells people how to blow things up as a means of entertainment.” Fred carefully searches the internet and finds that no one else is providing this type of newsletter. WOW! Fred believes he has found his niche market. He is an expert, he has the product and there is absolutely no competition on eBay, or the internet for that matter (other than terrorists who currently don’t sell on eBay).
So what’s wrong with this stupid picture? After all, Fred is a specialist. Fred has product. Fred has no competition. Sounds like a slam-dunk when you look at it from that narrow point of view. Now let’s forget the word dynamite and substitute in the product you are considering. Suppose that you are an expert. Suppose you have plenty of product at a price where you can make a reasonable profit if it sells. Suppose there is no competition. Does that mean it’s a slam-dunk? Sometimes, but usually not. Think about it a bit. We’ve all heard the phrase “If it seems too good to be true, it usually is.” If you consider this phrase in your Brainstorming process and in the potential of your niche market, you won’t be running into something with your horse blinders on. If it looks like a really great opportunity, look long, look close, look hard. If you’re lucky it could be a niche, or just another really bad business venture.
Ok, enough of this madness. I admit that this example was a bit stupid, but I think you see the point. Unfortunately, many businesses have failed because they believed in a product that was, in fact, a niche, but when the brought their product or concept to the marketplace, no one was interested. Niche Marketing, while a desirable goal, must be approached with extreme care and consideration. In the real business world, companies must exercise the same extreme caution with specialized products. They have to continually update them and make them better in some way for repeat business. As soon as someone recognizes the potential of their niche, then their product is an immediate target for competition. Eventually the technology can even become obsolete when someone figures out a better way to do what they are doing and their product is totally eliminated.
So, not only is the Brainstorming process important, but careful research will bear out whether you have discovered a true niche, or just another product that won’t sell no matter how unique it is. Even if you have discovered a true niche, you will still need to conduct periodic reviews of the viability of what you are offering so as not to become totally obsolete due to the innovation of others.
