Familiarity is one of the most important traits of a good niche market. Knowing the subjects or organizations involved with that market enables you to understand the needs of potential customers and communicate on a personal level. It also makes it much easier to create unique products and services that have instant appeal to the market, and position yourself as an exclusive provider.
For example, I have a love of boats, water sports and fishing. I wanted to own a marina, but starting a product decorating business was more in line with my budget. I focused my sales and marketing efforts within these niches, spending almost every day working with businesses within markets I was comfortable within and were very appealing to me.
Initially, I catered to boating and fishing businesses, offering them products that featured their logo. As I got to know this market better, I saw special opportunities for which I could use my resources as a product decorator. One of these was personalized products for boaters, who would pay top dollar for products, if they were unique enough.
One such product was personalized floor mats. The blank substrate cost about $6, and I would spend about $1 worth of ink decorating it for a customer, who would pay $35 retail for the finished product. It was a nice markup for a useful product that people loved. The mats offered non-slip rubber backing (perfect for the wet environment on a boat) and washability without fading the design. These mats became very popular in my target market, and enabled me to develop an entire line of products targeted to a wide variety of boat owners.
While I initially targeted this niche market, you can also create niches based on a certain product that can be marketed to multiple markets. Custom floor mats are a good example of this. They not only appeal to boaters, but also to RV owners, business owners, home owners, etc.
-Jimmy Lamb, Sawgrass Ink