Monday, September 20, 2010

Importance Of Identifying A Niche Segment For An Entrepreneur

Strike The Niche Segments

As an industry grows, it parallelly develops niche pockets which need speific services. It just takes a keen entrepreneurial outlook to identify such niches at an early stage. These niche areas could be lucrative opportunities if identified at the tipping point. A niche market grows into a full-fledged industry, which in turn, generates more pockets or niche segments within itself.

Niche areas are developed as a result of technological evolution or a change in our socio-economic set-ups. A niche market is a focused, targetable portion of a market. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. You can think of a niche market as a narrowly defined group of potential customers. The birth of the IT outsourcing-offshore industry in India, back in late 1980s, is actually an example of a burgeoning niche market.

When the pressure to improve the bottom line gradually surmounted with the corporate world in the West, the IT outsourcing-offshore industry witnessed the cusp of growth. It promised colossal profits and churned out many highly profitable ventures in the industry. Pressure to improve the bottomline was just one aspect. There were other drivers like upgrading of technology, digitalizing various departments of an organization etc. The niche need was not only restricted to the corporates of the western world, but it was very much imminent from India's perspective also.  As the Indian  IT offshoring industry plateaued on the growth curve, it further paved way for more niches within itself.

To identify niche markets you should break down the demography of your target customers into as many sub-categories as possible. You should study the pros and cons of serving each of these sub-categories with your product/service, and then arrive at your target niche audience. Validate your product/service offering with this identified niche group. In fact, when starting your own venture, it is very important to know your target audience and focus on selling to the rightly identified niche group.

Once you have the right niche identified, the probability of the success rate for your marketing and selling efforts, zooms up. Don't get overwhelmed by the idea of selling to a large audience. You shall appreciate this more if you keep in mind the practical hiccups that a start-up has --- lots of stuff to do with very limited resources! So start off by identifying your own niche, and then expand to larger market, introducing more products and/or services. Some of the opportunities [targeted usually at the small to mid-sized companies], which are looking lucrative now,  are presented below.

After the financial meltdown in the United States of America, the World and India too, has felt the need to go for lean organizations. This has opened up the prospects for the outsourced-CXO business models, giving more entrepreneurial options for outsourcing services in the niche areas.

It also makes a lot of sense for the corporates to see the advantages of lean corporate structure and concentrate on their core competencies. Hence, outsourcing other business processes and the frill-functions [which are equally important for company's growth], such as Marketing to the vendors specializing in such niche services, makes it a smart business strategy. Marketing Consulting [which includes sub-functions like market research, branding and Internet marketing], is an Industry by itself.  This niche industry has generated further pockets which need entrepreneurial attention, as they are still untapped opportunities. For example, providing marketing consulting to the hi-tech and IT outsourcing-offshore Industry in India. For all the boom that IT/ITES companies have witnessed, they have never quite leveraged the marketing strategies in its true sense. But with the slowdown, a lot of such IT/ITES businesses will need strategies to re-position themselves. Similarly, the hi-technology companies can leverage their market positions better with focussed and specialized marketing startegies.

On this backdrop, i got the privilege to interview Sudha Kumar, founder of Prayag Consulting (http://www.prayagconsulting.com/). Sudha Kumar has shared her wisdom with me for my reader community. So, keep tuned to read interview with Sudha Kumar, founder Prayag Consulting, soon!

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