Prospering in a Niche Market
Niche MarketingProspering in a Niche Market
by Pat MeansWhen my former partner and I each invested about $1,000 in 1992 to launch Turning Point Magazine for middle-to-upper-income African Americans in Los Angeles County, we were clear about our purpose. In the wake of the not-guilty verdict for the Rodney King police brutality case that led to civil unrest throughout the city, we saw the need for a publication that would cover issues of interest to African Americans and champion community rebuilding efforts.
In the six and a half years since, Turning Point Communications, now a sole proprietorship with six employees, has expanded the quarterly statewide. It has added a second publication, MoneySmart Magazine. And it has launched an awards program, called Living History Makers, to honor African-Americans in six categories, such as entertainment, education, and business, as well as an annual three-day conference, called the California African American Business Summit.
In the process, Turning Point Communications' annual revenue has grown to $750,000. And I have become adept at maneuvering in what is commonly called a "niche"--an enterprise dedicated to a specific, and often limited, cadre of buyers.
What follows is a look at what I identify as the three most important considerations for prospering in a niche business.
Untapped Potential
One of the pluses of getting into a niche is that a market usually exists for a product or service that isn't being addressed by mainstream providers. In other words, the target market is under-served and ready for the taking.
When I began publishing Turning Point Magazine, I knew African Americans comprised only 7 percent of California's population, an audience that large media companies had ignored because of its limited marketing potential. Indeed, no magazine existed specifically for this market. However, for a small company like mine, that 7 percent--which represented some 2.5 million people--was a gold mine. With virtually no competition from the big, deep-pocketed media outlets, I was able to establish my little, thinly financed outlet as the leader in this market segment.
Unparalleled Service
Once established, a niche business must dominate its market. In a niche, Number One is the only place to be. You don't have the luxury of languishing in fifth place!
To achieve this goal, the company needs to understand and serve its clients or customers--and it must be creative about doing so. While all businesses should be providing outstanding customer service, the niche player has no choice but to make it clear that it is willing and able to act on its clients' behalf.
At Turning Point Communications, I've had to share our data base, build relationships with major opinion makers throughout the state, and launch new vehicles, such as our awards program and annual conference--all in an effort to convince advertisers that I could help them reach the middle-to-upper-income African American consumer better than any other enterprise. When clients seek information or help, I bend over backwards to lend a hand. I simply can't afford to do otherwise.
Reasoned Expansion
While getting into a niche is doable and staying in can be finessed, expanding is trickier. That is because the market is, by definition, limited, as are resources usually. As dedicated as the niche player is to its market, however, it must expand in order to grow. The name of the game is to plan, plan, plan. Mistakes are costly in a niche.
At Turning Point Communications, we've accepted limited outside financing, preferring to finance our expansion through earnings. Yet, even though more than 90 percent of all new magazines fail, we've always been profitable. Our secret has been planning new ventures carefully, undertaking only those projects that would generate both long-term and short-term profits, and concentrating on those ventures that could be cross-supported by our existing products.
In launching Living History Makers in 1993, we saw the awards program as a vehicle, not only for recognizing deserving African Americans, but also for identifying and establishing contacts with influential leaders, enhancing our value to advertisers. In the case of our new venture, MoneySmart Magazine, which debuted in November, we received a direct benefit: the publication is being underwritten by Bank of America, which had been seeking a vehicle for providing personal finance strategies to the demographic market we serve.
When we decided to sponsor a conference, the California African American Business Summit, we didn't just shoot from the hip. We researched the concept for two years before going ahead in 1998. If our advertisers weren't satisfied with the format or programs we put together, we reasoned, we wouldn't have been able to recoup from what would have been a public-relations disaster. Our planning paid off: some 350 people attended our first three-day conference, and we expect 600 this year.
Summing Up
So, still want to start a niche business? For me, a niche company has provided financial reward and a way to contribute positively to a community to which I've always been personally committed. Having accompanied me this far, keep these points in mind should you decide to go ahead:
Fill a need,
Know, serve and dominate your market,
Plan, plan, plan your expansion.
Operating in a niche market can be both satisfying and frustrating. Prospering requires commitment and dedication, but the rewards can be tremendous.
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