How to Use Niche Marketing to Build a Business from the Ground Up

donuts overhead

Here’s a simple recipe for ecommerce success: Start narrow and grow wide.

The truth is, if you don’t know what separates your product from the competition, then your customers definitely can’t tell the difference either—and that means you need to define a niche market for your business.

What is a niche market?

A niche market is a smaller segment of a larger market. Specific products often focus on niche markets, satisfying narrow demands around features, pricing, quality, and availability, in order to differentiate from the competition and more precisely target a group of ideal customers.

It's no understatement to say specialization is at the heart of kickstarting a sustainable, successful, and scalable business. Whether you’re trying to get your online store off the ground or you’re still looking for the perfect idea, carving out a unique niche for your business is the key to growing your customer base.

Specializing doesn’t just mean understanding your strengths either. It means understanding who your customers are and how your business can better serve them. You need to be able to connect with your audience on a personal level, so that you can focus on turning them into a team of dedicated followers who will push your business forward.

Once you’ve discovered your niche and won over your core audience, you’ll be able to redirect your efforts towards reaching wider audiences and growing your business.

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The benefits of niche marketing

Not only does niche marketing help you get a leg up on the competition by setting you apart from the pack, but it also brings with it a valuable set of benefits that might make it the right fit for growing your business:

  • It’s less competitive: the smaller your target market is, the less competition there will be for the same audience. Try to narrow down your niche as much as possible to make connecting with your audience even easier.
  • It’s more affordable: with niche marketing, you can get more bang for your buck and save on your marketing campaigns. Since your audience will be smaller and easier to target, you won’t have to spend nearly as much money testing out messaging and tactics.
  • Your customers are more loyal: niche marketing is all about nurturing a base of true believers. These hardcore fans will make up the backbone of your business. Niche customers will trust that you have their best interests at heart since you understand them more than the competition.
  • Your audience is easier to target: when you run a niche business, you’ll get to know your customers inside-and-out. Having a very specific audience in mind makes targeting your marketing campaigns simple and straightforward.

The ingredients of a successful niche marketing campaign

There’s a common myth that crafting a successful niche marketing campaign is all about finding as small of an audience as possible and then creating a strategy that only serves that audience.

In reality, the secret to building an effective campaign is uncovering an underserved niche market and then creating a strategy that makes everyone want to be a part of that niche. It’s about creating a vision of your ideal customer and then motivating your audience to take ownership over that identity for themselves.

A niche isn’t just a small slice of the pie—it’s a big dream. A good niche marketing campaign needs to get people excited and make them feel like they belong to something larger than themselves.

You need to not only speak to your ideal customers, but also activate the members of your audience who might not realize that they’re your ideal customers yet.

1. Exclusivity

Niche marketing is all about providing an audience—especially one that might feel ignored or undervalued—with a sense of identity and belonging.

For an example of this, let’s take a look at one of the biggest brands out there: Budweiser. In their recent #NotBackingDown Super Bowl ad, Budweiser gave niche marketing a shot by carving out an identity for their core audience that encourages them to feel good about choosing Bud over craft beer.

This campaign capitalizes on the feelings of frustration and marginalization that fans of big beer brands may have been feeling in the face of craft beer’s rising popularity. By focusing on what Budweiser isn’t (”Not Small”, “Not A Hobby”, “Not Sipped”), customers are given an identity that pits them directly against craft beer lovers.

If you do x, then you definitely aren’t a part of our group.

This “Us vs. Them” mentalityis a powerful psychological trigger known as the Social Identity Theory.

Budweiser is not for everyone and they’re proud of it. When you separate your audience into an in-group and an out-group, you give those that fit into the in-group a sense of purpose and you make everyone else worry that they’re being left out.

By discriminating against the out-group, the in-group boosts their sense of self-esteem and belonging. This process gives the in-group a social identity; a means of identifying themselves in contrast to the world around them.

When you’re building your niche marketing campaign, it’s effective to contrast your target audience with another group to emphasize that not only are they different, but they should be proud of being different.

Niche markets have often been ignored by other businesses and you need to emphasize the resilience and uniqueness that make them special.

2. Storytelling

To build a successful niche marketing campaign, you need to sell more than just a product, you need to sell a lifestyle. Telling a compelling story about your brand is one of the best ways to showcase exactly why your product is the perfect fit for your customers’ lives.

Sole Bicycles, a single speed and fixed gear bicycle retailer, has done a fantastic job of carefully crafting an aspirational story around their products.

sole bicycles story

A quick trip to the aptly-named Story section on their website is the best jump-off point for taking a look at how they market their bikes as part of a larger lifestyle, rather than just transportation.

“Your bicycle should be live music, it should be art, it should epic, it should be dawn patrol and late night adventures.”

Right away, Sole Bicycles is not only communicating what kind of brand they are, but how their customers should use their products.

They use fun, energetic, and hip language to fully paint a picture of the creative adventurers who ride their bikes. Instantly, the audience knows that this isn’t a product for racing or mountain biking, it’s a way to casually get around while you do cool and fun stuff.

“Whether cruising from the office to the beach, the coffee shop to campus, or just taking a lazy Saturday ride with friends, your bicycle is a vital accessory.”

The fun-loving young professional. The hip trendsetting student. You, whoever you are, having fun with your friends. This is the bicycle that you need if you want to live this dream.

These elements of storytelling are a quick and easy way for Sole’s audience to know whether or not they fit into their target audience and if this is the right product for them.

Their storytelling doesn’t stop with the Story page of their website either. Sole has also created a rich content marketing universe to draw customers in with high value pieces of content like curated mixtapes and videos done in collaboration with popular artists and musicians.

Recycled Firefighter is another business that built their brand’s story right into their products.

Selling wallets, belts, and other accessories made from recycled firehoses, they were able to tap into a market called “the everyday carry community”—a niche group who are passionate about utility, preparedness, and leaving the house everyday with essential tools that hold specific functions and purposes in their lives.


This niche community was perfect for Recycled Firefighter’s accessories—all of which have a real story of hard work and survival behind them. For a look at their storytelling in action, head over to their Instagram, where you’ll find a mix of the tough-as-nails quotes and firetruck imagery that resonate with their audience.

How to start a business in a niche market

Ready to get your own niche business going? Let’s take a step-by-step look at how you can come up with the perfect idea and get started.

Step 1: Understand your ideal customers

If you’re having trouble coming up with the right idea for a niche business, think about it this way: Sometimes you need to find a customer first, not a product.

Once you’ve figured out who you want to sell to, narrowing down what you want to sell to them and how you want to sell it to them will come naturally.

To help you determine who you should be selling to and uncover your unique selling proposition, you’ll need to first create buyer personas for your audience to narrow down who should be considered an “ideal customer”. The more specific and detailed your Buyer Personas are, the better you’ll be able to understand and target your audience.

One of the easiest ways to find a customer is by looking at your own life and interests. Choose one of your passions and run with it. Whether it’s an extracurricular activity you love or a skill that you’ve mastered, anything is fair game.

handband pro

In fact, sometimes discovering your ideal customer just means solving a problem for yourself. Danielle Pettifor was a crossfit athlete looking for a way to protect her hands during workouts. When she couldn’t find a suitable one, she invented the HandBand Pro—gloves that are designed to protect crossfit athletes’ hands without sacrificing grip or comfort.

This niche business all started when one crossfit athlete decided to help make other crossfit athletes’ lives easier. Since then, it’s expanded and now offers a wide range of different fitness products, including gym bags and quirky t-shirts.

Step 2: Identify your niche

After you’ve figured out your Buyer Personas, you’ll now be able to use what you’ve learned about your customers to define a niche for your business.

Remember, your niche should be:

  • Unique: A niche market needs to have defining traits that separate it from larger audiences and make it easier to target.
  • Identifiable: You should be able to easily describe your niche using details like demographics, behaviors, and interests.
  • Scalable: Although your niche might represent a very specific subset of a market, you need to make sure that you’ll be able to expand on it in the future to reach larger audiences that may currently fall outside of your niche.

Step 3: Come up with a product

In the process of defining your niche, you’ll probably discover some great ideas for products that you can now sell to your ideal customers. Always keep an eye out for inspiration: Wherever there’s a customer with a pain point or need, there’s a new product waiting to happen. 

A photo posted by (@petapawter) on

All it takes to find the right product is identifying an existing gap in a larger market. The Bulldog Shop by Pet-A-Pawter is a perfect example of turning a market void into a viable business. When Pet-A-Pawter’s founders noticed that there weren’t many pet apparel stores catering to bulldogs, they launched their own niche store to supply broad-chested dogs with quality clothing.

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Step 4: Determine your unique selling proposition

If you’re thinking about starting a niche business, one of the most important parts is hammering out your unique selling proposition.

Your unique selling proposition needs to be baked into your brand from the very beginning. It’s the one defining element that sets your business apart and it should guide everything that you do—from marketing campaigns to product development and everything in between.

It might be tempting to fall back on the quality of your products or packaging as your business’ central differentiating element, but a truly effective unique selling proposition should go much deeper than that.

It’s important to keep in mind that your unique selling proposition won’t necessarily be a single benefit or offering. Instead, you’ll find that it’s a confluence of factors which come together to delight your customers and turn them into lifelong brand advocates who always choose your business over your competition.

Here are some questions to ask yourself, using your Buyer Personas as a guide, to find your unique selling proposition:

  • What can you offer your customers that no one else can?
  • Why should your customers bother buying your products?
  • What value does your business bring to your customers lives?
  • How can you use what you now know about your customers to ease their pain points more effectively?

It’s OK to be different

While factors like quality and customer service can definitely play a part in your business’ success, you need to be bold if you want to really stand out online and rise above the noise.

outlaw soaps

Just take a look at Outlaw Soaps, an online soap store aimed at rugged adventurers who love being clean as much as they love blazing their own path.

Outlaw Soaps cut out a unique niche for themselves by offering up scents, including bacon and whiskey, that are geared towards customers that need a good scrub, but don’t necessarily enjoy traditional options like lavender or vanilla.

Alienating potential customers—especially when you’re starting out—might sound like a bad idea. If you’re trying to make your first sale, it’s normal to want to reach as many people as you possibly can.

However, casting a wide net can drain your resources and leave you with nothing to show for the time and effort that you’ve sunk into your business.

Instead, you need to see being different as a positive thing. Being different is your strength. It’s a powerful tool that will give your business a serious edge over the competition—even if it means that your products won’t be a good fit for everyone.

A photo posted by Sriracha2Go (@sriracha2go) on


Sriracha2Go is a great example of a niche business with diehard fans, but a product that doesn’t necessarily have widespread appeal. While sriracha is a condiment with a dedicated fan base, its intense heat makes it a polarizing product.

Founders Farbod Deylamian and Kyle Lewis saw a niche market—people who are crazy about sriracha and want to take it with them everywhere they go—and turned it into a business dedicated to supplying adventurous spicy food fans with everything they need. First with their signature mini hot sauce bottle keychains and now with a wide range of products including sriracha-themed mugs and socks.

Remember: It’s better for your business to be the first choice of some rather than the second choice of all. You need to identify what you’re really good at, throw your weight behind it, and dominate that one area above all else.

Specialize now to grow later

Now that you’ve figured out what you’re really good at, you can start putting that knowledge to use by building highly targeted marketing campaigns to win over the hearts and minds of your core audience.

Whether you choose to live in your niche or you’re just using it as a stepping stone to grow your business, focusing on what you’re good at is always a smart move. So, get out there and own your niche!

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