Finding a Market Niche for Your Craft Business

Finding a market niche that you know and understand, and that has committed customers ready to buy your products can go a long way toward differentiating your business from competitors at craft shows and online.

What is a Marketing Niche?

In marketing, a niche is a small sub-segment of a group or potential customers.

For example, instead of making handmade soaps that appeal to all people, you might focus on handmade soaps that are all organic and appeal to environmentally conscious people. Alternatively, you might make handmade soaps with ingredients that are not harsh and have healing ingredients that appeal to people with sensitive skin.

Outside of marketing, we sometimes use the word "niche" to refer to something that a person is ideally suited to. For example, if we were talking about someone who, at work, has found the perfect job that is an ideal fit for her skills and interests, we might say, "She really found her niche in that job."

It's wise to look at niches from that perspective as well. So, you're not just looking for any subset of your larger market, but you're looking for a subset of your larger market that you:

• know and love
• and can serve their needs better than other business owners

Finding a niche means coning down the focus of your business so you are targeting a smaller subset of a group, and you understand and serve the needs of that group so extremely well, they can become passionate fans of your company.

How Will Finding a Market Niche Help My Craft Business?

Mastering a niche makes you special.

The soap maker who makes soap that is gentle on sensitive skin will stand out from other, more generalized soap makers. Her soaps might not appeal to everyone, but when a customer with sensitive skin discovers soaps don't irritate the skin, she will have a committed customer who will come back for more and recommend her to anyone she knows who also has sensitive skin.

Serving a niche effectively will connect you with a group that is passionate. Done well, it can turn you into an ally in their special area of interest.

Don't think of focusing on a niche as ignoring a broader range of people, instead think of it as becoming incredibly special and valuable to a specific group that you can serve extremely well.

An example of successful niche marketing:

There's a company in my area that sells homemade jams, dip mixes and nut butters and regularly sells at craft shows near me.

I have always enjoyed their food, but I became a devoted customer when my younger son was diagnosed with a peanut allergy because this company's nut butters are all peanut free.

Everyone in my family loves almond butter, but, where I live, it is very difficult to find almond butter that doesn't carry a risk of cross contamination with peanuts.

I had been a casual customer of this company before I had a child with a peanut allergy, but now that they serve a specific niche need of mine, I'm an enormous fan.

Instead of casually buying a jar of jam from them at a craft show, I stock up on plenty of jars of nut butters when they are in town. If I know they'll be at a show I'm attending, I will always earmark some of my spending money for them before I even get to the show.

I sought out a local store that carries their products and made sure the store owner knew why their nut butters were special. I also tell every family I know that deals with peanut allergies  about their products.

Plus, I just have an extra warm fuzzy feeling about the company because I'm grateful that they understand and are meeting a need of mine that most companies don't meet. I'm happy to spend my money there and support their business.

That's the difference between a casual purchaser and a committed customer.

Niches Are Particularly Good For Online Sales

When you're selling your crafts online, compared with selling at craft shows, you have a much larger group of potential customers that you could sell to, but you also have a much larger group of competition.

One excellent way to stand out from that competition is to serve a particular niche extremely well. So, you might not become the hottest soap maker on Etsy, but you might very well become the hottest soap maker who sells gentle, healing soaps.

Narrowing down your focus means you don't have to compete with all of the soap makers online, you just have to get your product in front of people who are looking for a very specific type of soap. Because the number of potential customers is so large online, you can really narrow down your focus and still have a large enough customer base to build a viable business.

Choose Something You Know

When you go looking for a subset of the larger group you already serve, you'll do best if you choose a group you know well and feel passionately about.

One of the keys to successful niche marketing is that you are able to serve the needs of people within that niche in a way that no other business can. You need to really understand their needs and motivations to buy.

If you grasp the ways that group of people is not being served in a way that only an insider would understand, and then you meet those needs in a way that only an insider could, that specialized group will be wildly impressed by your company.

Also, if you are already an insider in your niche, you will have connections and contacts who may be able to open doors for you within that niche.

Choose Something That Customers Buy and Pay Well For

If you're going to make something, you might as well make something that sells for a good price. It often takes just as much time and talent to make a lower priced item as it does to make a higher priced item, so you might as well pursue the more profitable items.

This strategy isn't fool-proof, but it can give you a starting point when researching niches.

Go to Etsy and search for the broad category of items you make. Now sort your search results by price, highest price first. Remember the first row of search results on Etsy are sponsored results, so start looking from the second row.

Take a look through the search results, and ask yourself several questions to analyse what you see:

• What type of products are listed for the highest prices?
• Are the highest prices significantly higher than the lowest prices (some categories have larger price variations than others)?
• What is special or different about the highest priced items compared with the lower priced ones?
• Are there different price levels for similar items? If so, what is the difference between one price level and the next?

Think through what has been done to earn those higher prices, and ask yourself whether you could replicate that. I'm not saying you should copy another crafter on Etsy. I'm saying ask yourself whether you could make your own unique products that serve that higher paying niche.

Could you do it better than current sellers on Etsy? All the better if you can!

Do be careful about outliers, that is prices that are way above (or below) the price of other similar items. You need to look for a group of similarly priced items and assess the qualities that make the Etsy sellers able to sell them for that price.

Explore Etsy shops in More Depth

Just because items are priced a certain way, doesn't mean they are selling well. Once you've found a group of well priced items in a niche you think you could serve well, click through to a few shops that are already selling similar items on Etsy for a more in-depth assessment.

1. Look for the Shop Info section and click on the number of sales.

That link will show you what items have sold and for how much money.

Some shop owners disable the feature that allows other to see what they have sold. If the number of sales is not a clickable link, they have disabled that feature. You may need to check out several shops to find a few you can explore in more depth.

2. Click through to several listings in a few shops that sell the higher priced items and look for patterns.

Ask yourself:

What it is about these items that command a higher price when compared with the lower priced items in the same category?

Also check out how long the store has been on Etsy. That will give you an idea of how many sales have been made in a specific time period.

This research doesn't guarantee that if you just post similar types of items (with your own unique design, of course) you will automatically make the same level of sales. People who are making plenty of sales are typically doing plenty of promotion are well. However, it does indicate that the product you have in mind does have a market, and with the right promotion you could make healthy sales.

Check What People Are Searching Online

You can also look up keywords within your specialty to determine what people are searching for online. The terms people are using to search for your items online can give you some insights into more specialized products that have a customer demand.

WordTracker is a useful site for getting keyword information that can help you find a niche market.

From WordTracker, type in several keywords someone might use when searching for your type of product online. Keep it fairly broad at first, you can always narrow it down if you need to, then see what comes up.

WordTracker will provide you with a list of keyword phrases related to you keyword that people use to search online. Within that list, you might find a gem of an idea for a viable niche.

Learn More About Finding a Niche Market for Your Craft Business

Develop a Craft Business Concept That Stands Out From the Competition: Here's how to take your own unique skills or experiences, apply them to your craft business, and create a business concept that is truly unique and meets your target customers' need in ways the competition does not.

Own Your Niche: How to stay on top of the latest developments in your business niche, so you can be one step ahead of your competition.