August 15, 2008

The World's Greatest Niche Market

I read the most hilarious marketing case study article in the New York Times the other day. It's from an article titled Music Retailer Thrives Serving Captive Audience. In an age of audio downloads and all kinds of techncial innovation in the music industry, the article describes how a music retailer has built a thriving music business selling audio cassettes–yes, audio cassettes.

For those who have difficulty remembering what that is, it's how music was stored before iTunes, mp3 files, and audio CDs. Yes, before all of that there was the lowly audio cassette.

So who in the world would buy such a thing?

In two words: prison inmates

Yes, for the 2.3 million inmates incarcerated in our country's prisons, they can only buy music on audio cassettes. They  areforbidden from having electronic devices, so sorry no iTunes. They aren't allowed to use audio CDs because those can be turned in an edged weapon. So if you love music and you're doing time, you don't any other choice. You can only buy audio cassettes.

And apparently, there's only one company in the world that will sell it to you. You gotta love a monopoly and you gotta love a business person who finds a target customer, figures out their problem, and then solves it. It's the oldest, simplest, and continues to be the single best formula for creating a profitable business.

The reason I talk about target market selection so much is because it's the one marketing decision that impacts all of your other sales and marketing activities. If you pick a target customer that barely has a problem, has multiple choices of vendors, and perceives no difference between what you have to offer versus your competitors, life's going to be pretty darn hard in the sales and marketing department.

Target customer selection and picking the right problem to solve for that customer is quite fundamental to the process. Most of our Bookmercial clients have usually figured this out years before we ever meet with them. Yet in the process of creating a Bookmercial for our clients, we often look at the company with a fresh set of eyes–seeing what their customers see.

This gives us a unique perspective. The kinds of clients we routinely turn down are ones where there's nothing unique about the company. They don't target a unique niche. They don't offer a unique product or service to their market. In short, there's nothing different about them whatsoever.

It's darn near impossible to create an effective Bookmercial in  these cases (effective defined as something that will measurably increase sales and profits). This is also why the topic is somewhat top-of-mind for me these days. A business that's unique in some way, shape, or form is much easier to market than one that's not.

When you're unique, you'll find your marketing costs go down and your response and closing rates go up. Uniqueness is an enormous marketing and financial advantage.

While picking a niche market is not the only way to be unique (The others are solving a unique problem ignored by others, or solving a common problem in a unique way), it's vital that something in the business is unique.  Once you have that, the next step is to communicate this uniqueness to your target audience aggressively, frequently, and consistently.

Spread the Word!

Filed under Positioning by Victor Cheng

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