When companies from the West first visited a de-regulated India, they were licking their fingers in anticipation. For India was a country of almost one billion people (well, it is over one billion now) and these companies could just see dollar signs no matter where they went. But sheer numbers doesn't make for sales.
And many companies burned themselves trying to get off the ground, because the vast majority of people simply couldn't or wouldn't buy their products. They learned, after a lot of trial and error that sheer numbers don't mean a thing.
The same applies to determining if you have a viable niche
It's impossible to know at first if what you're doing is going to be successful. So you look for one big factor: competition.
Huh? Competition?
Yes, competition. If you can find a ton of competition, then you know it's extremely viable. Why? Because a whole truckload of people have been there before you and have found it viable to keep running their businesses. But just having that truckload still isn't the best denominator, so you go even further.
You subscribe to their list. You see what they're doing. Are they selling higher priced product and services? Or is it all discount priced? If you sniff some higher prices, then you know for sure that there is a market, and a high price market too. If that high price continues over the years, then you know for sure that it's sustainable.
This isn't a foolproof method
You're looking in from the outside, so it's hard to know for sure what profits etc, exist in the business. But at least you know it's viable.
This is how I got into marketing
You see I was indeed fascinated with marketing, but fascination isn't enough. The book that nudged my life in a different direction was ‘Good to Great' by Jim Collins. And in this book, there was a concept called ‘The Hedgehog Principle'. And the principle consisted of three questions.
1) What can you be the best in the world at?
2) What drives your economic engine?
3) What are you deeply passionate about?
So I was passionate about marketing, and could easily be the best in the world at it (if I started, which I did). But the third question is the one that the companies that came to India never answered. And that is: What drives your engine? How viable is this niche?
And the answer must come from the market
The more competition that exists, the more viable the product or service. Which means that if the market is saturated with fad diets, you have more of a chance of writing a bestseller with a fad diet, than with a rigourous lifelong diet. If TV is swamped with reality shows, then you're better off making yet another—yes, another—reality show.
And back to my story: At the time, people like Jay Abraham were selling single seats at workshops for $5000. I went to workshops that were priced at $10,000. All around me I could see clearly that people were selling product both offline, and shortly after, online too. And for pricey sums too.
And price is a good benchmark
That high price factor shows that not only does the market exist, but it's a mature market allowing for pricier amounts as well. And there's another thing about the high prices. It allows smaller players to co-exist.
If everyone is discounting each other in a tiny market, then you struggle to get off the ground. But if there are several layers of pricing, it's a lot easier for you to not just get into the niche, but slowly power your way up as well, if you wish.
But what if you don't want to follow the crowd?
Well, that's noble, but the pioneers always get the arrows. This means you have to educate the market and that takes a lot of time and effort. And of course, money. It's a lot better to follow the crowd (read: competition) and start off there, and then later, once you've got enough of a following, branch off where you will.
Big companies can burn through tens of millions of dollars, and not feel so much as a twinge.
You can lose a lot less and run into serious trouble. It's better to start with the competition.
It sure saves having to stock up on all the anti-burn lotion.
P.S. Do you have a question or comment? Write it here and I will respond.
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Great article, thank you for sharing. I also like your drawings which give an extra touch to originality. I think your marketing advices are one of the best around and you certanly have a lot of experience.
I have a question though. To me it seems that global internet marketplace is getting more and more crowded each day, which makes it harder to compete with many of well established authors and websites.
As I see it, one needs to find a super focused niche or have something really original to succeed (if there is not much money to invest). I think in the long run it will be more realistic to succeed locally than globaly, because in certain well established niches, the competition is simply too strong.
Or, how do you see things, where is the future heading?
Best!
Not a niche, but a difference. Every niche eventually fills up. Being different is critical.
Hey Sean,
Great article. How would you go about deciding there is too much competition? How do you get ranked well in an area that you cannot compete with monetarily?
Jay
Rankings aren’t the most important. What’s important is that you’re different in a well established field. That gets qualified people to you.
Great article! As someone who helps solopreneurs find their ideal niche, I really resonate with your perspective about competition being a great indicator of a viable niche.
I have a similar system that I use to help my clients solve their Niche Puzzle:
– WHO do you help
– WHAT solution do you provide
– WHY should people work with you
I always recommend starting with your solution so you can tap into your skills, passions, and experiences. But it is a synergistic process and all three pieces have to fit together.
For the WHY, we definitely look at the competitive landscape to ensure it’s a viable niche. We also look at what is unique about your approach, perspective and message.
Thanks for sharing!
Cindy
My pleasure, Cindy.
Hi!
You finally hit my problem right on the nose!! I’ve always had cutting edge programs and material and no one else is doing what I do … yet. Educating people is exhausting and it doesn’t pay me anything!! Yet what I have is worth a bazillion!! Aggghhh!!! Thank you for the tough talk. I guess I’m back to the drawing board to coach businesses :(.
That’s correct. It is exhausting. Glad I could help.
Sean
Good post, your break down and explenation is very good. I like the way you relate the layers of pricing to your niche/market it is a good way of explaining it.
If you want to get a higher price for your product then you have to be able to convince your market you are a authority (not necesarily an expert). You can also look at the market and see what everyone is targeting and do the opposite to make yourself stand out.
For new products hmm yes you can burn through money fast but if you hit the sweet spot with viral traffic or the right combination then you can pull it off, these are few and far between
To prove my point, have you ever seen Caine’s arcade – basically a 9 year old boy built a cardboard arcade, a film maker saw it at the kids dad’s auto spare store. He made a fild as he was the only customer and flashmobbed it. He now has over $200 000 in his scholarship fund and has a foundation to raise money for other kids who want to be entrepeneurs. Awesome story – here is the link http://cainesarcade.com/
That’s quite a story. Thanks.
Hi Sean, I agree so many people think that by building a business online they will easily attract ‘millions’ into their business; and in the effort to attract lots of people they end up attracting few to none. Understanding your target market is where the focus needs to be.
Yes, and on the Brain Audit we go a little deeper with target profile.
Good thinking, but if I was to follow your logic, I would write a book on fad diets since they are so popular rather than one on a different, realistic approach to dieting. I get your point though, in my case I wouldn’t want to follow that crowd, but work hard to establish my uniqueness, as you put it…ahh so much to learn.
Thanks Sean
My wife and daughter want to take Ramit’s Zero to Launch.
It shows you how to test your ideas, choose a niche, decide on the products, build the site, put marketing on automatic (evergreen launch), etc.
I want to sell them on you instead.
Do you have something that will take them by the hand?
Both look at your site and see info for established marketers only. They believe your stuff is good for me, but not them.
Any ideas?
PS I ordered your book off Amazon, yesterday.