Finding a niche is key to defining your marketplace

I returned late last evening from New York City. My last day in the city was Sunday, and with several commitments, I needed to move quickly, so I utilized the subways. On each of four trips, I became a "customer" for a small business.

The subway rides were taken on an express run, so the stops were less frequent, and each of the small businesses had time to "work their market and customers" — the captive riders on the trains. The four businesses were: a young man selling fragrances, a saxophone player, a lady selling DVDs and two young men who tumbled, balanced on their hands and did some pretty remarkable gymnastics stunts on a moving train.

I did not buy any of the products, but I was impressed with both of the service providers and paid for the entertainment, so I guess that you would say that 50 percent of the companies were successful with me as a customer.

I relate the above to emphasize the importance of understanding your customer and what the customer needs or wants. I did not go to the subway to buy anything — I just wanted to get to my next appointment on time and without a lot of hassle. What I needed was something to pass the time, a diversion from the monotony of looking out of the train windows at black tunnel walls as I progressed from one stop to the next. My associate and I enjoyed every minute of the entertainment and talked about it several times during the day.

In the parlance of marketing, we label this market identification as "finding a niche" — defining a part of the market where you can differentiate yourself from the competition and the noise and clutter of the marketplace and hopefully make a sell.

Some common characteristics that you should look for in a successful niche are:

• Customer Profile: Who is the target customer, how do they decide to buy, and what influences the buying decision?

• Market Size: The segment of customers should be large enough to enable you to be profitable.

• Uniqueness: Customers see themselves with different requirements, having special needs that you are fulfilling. You also want to assess the key competitors and identify your strategy to differentiate yourself in the market.

• Accessibility: You need to be able to find the customer, and they need to be able to find you at the lowest possible cost, and you need to be able to deliver your product or service cost effectively.