In 1997, Apple was on the verge of bankruptcy. The company had lost its reputation for innovation, and worse, their products had come to be viewed as “not so different” from those offered by Microsoft.
However, everything changed when Steve Jobs returned to the company. This was because he didn’t focus on serving every customer. Instead, he focused on customers who wanted a more reliable and elegantly designed product — and were willing to pay a premium price for it.
It’s a strategy that led Apple to become the most valuable company of all time just 15 years later.
How to Reposition Your Product for Greater Profits
Many entrepreneurs share a similar frustrating experience: they have a product that has been selling, but over time the sales begin to stall and profit margins suffer. This doesn’t necessarily mean, however, that they have to start over with a new product. Instead, one can take what’s working already and sell it to a specific niche market.
In my book “The Predictable Profits Playbook,” I tell the story of an entrepreneur who sold a product to help people improve their golf swing. I suggested to him that the same product could be sold to specific groups of golfers. After all, different people have different goals when it comes to golf. Younger guys may be focused on maximizing their power, women may want to be more consistent and older golfers may be more concerned with accuracy than any other portion of their game.
The client’s product could work for all of these different groups — the fundamentals of a good golf swing are pretty much the same for everyone — but by positioning the product specifically for each market, he could make it seem tailored for only that group.
Making Your Product “Just For Them”
When you niche your product for a specific market, it can mean a huge boost to your sales conversions because customers believe you are more likely to understand their “unique” situation. A product perceived to be designed specifically for a customer’s personal scenario is not only more likely to sell — customers are also more willing to pay more for it.
In Dan Kennedy’s book “The Ultimate Marketing Plan,” he gives a great example of the power of niching with the “Sun Tea Jars,” which are sold in many stores. Sun tea is a pretty simple concept — place the tea bag in a glass jar with water and allow the hot sun to do the rest of the work.
If we think about it, any plain glass jar will do the job. But customers will still walk past plenty of perfectly good, generic jars to purchase a Sun Tea Jar that costs four to five times as much. The only difference is the way the jar is labeled.
But niching isn’t just better for the business that provides the products. It can also enable you to provide more value for the customer as well.
When you are marketing to a specific niche, you will understand those customers’ needs better than your competitors. You can offer a solution that is custom made for their desired results. That customer will be happier with the experience because of the additional value that only you can provide — an experience that they will likely share with their friends, family and coworkers, especially if those people share similar interests or needs.
In our interconnected world, providing maximum value to your customers is critical for long-term success.
Repeat and Profit
Focusing on a niche market doesn’t mean you can’t grow the business. In fact, one of the best things about taking an existing product and niching it for a specific market is that the process is repeatable.
Take the golf swing course, for example. That same product can be repositioned to appeal to multiple niche markets: young golfers, baby boomer golfers, female golfers, etc. All are separate niche markets that would benefit from a customized course, but can be marketed to very differently.
Identify a Profitable Segment
The key to niche marketing is to identify a profitable segment of your current customer base for which you can specifically customize your existing product. Discover the unique needs and challenges of that segment, and tailor your product to fit exactly what they’re after.
Once you have saturated that niche, just repeat the process with a different customer segment.
By positioning your existing product for a different market, you will soon find that the “riches really are in the niches!”
A version of this article originally appeared on the author’s blog.
Charles E. Gaudet II is a leading marketing consultant and speaker providing advanced marketing strategies to small business owners. He’s the author of “The Predictable Profits Playbook.” His advice appears in worldwide media including Forbes, Inc. and Fox Business. Follow him on Twitter @CharlesGaudet or at his blog at http://www.PredictableProfits.com.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.