Finding, Developing and Prospering From Niche Markets
Discover tips and techniques that can help you profit from untapped niche markets.
It's no secret that the printed-apparel market is fiercely competitive. Screen printers constantly complain about price-driven competition and the almost unending recurrence of new start-ups. Customer loyalty seems more of an oxymoron than a reality. Add to this the commodity perception of the "silkscreen T-shirt printer" and you have a recipe for low profit margin and increasing frustration. Sooner or later, all serious screen printers faced with these issues will search for a niche market where they can differentiate themselves and increase their profit potential.
What exactly are niche markets? How are they discovered and developed? Like so many business buzzwords, niche marketing is thrown around casually, almost as if these markets were laying around just waiting to be picked up. This may be the case in some instances, but the highly competitive nature of our industry makes such a scenario highly unlikely. Still, plenty of profitable niches in garment screen printing exist. You just have to know what to look for before you can find it. Like any hunting expedition, you have to identify your target.
What is a niche?
A niche is a specialized, narrow, and focused segment of the general market with specific interests. Mass markets, on the other hand, are general markets characterized by mass-market advertising. Think television with the three legacy networks where a national commercial needs a minimum market of 10 million to justify the campaign. Nothing you see advertised on TV is a niche.
The very nature of general mass markets has led the television industry, and specifically the cable industry, to identify and differentiate programming in order to capture more specific clientele. Cable channels like Animal Planet, Discovery Military, Golf Channel, History Channel, and any of the myriad other special-interest channels describe areas of niche interest within the larger, general population. As far as we're concerned, these are all still niche-oriented mass markets. We're getting closer though, as these national niche channels also deliver good results for local, targeted advertising. An example is your local golf pro shop advertising on the Golf Channel. They're delivering a targeted, local message to a specific interest group.
Niche markets are all about special-interest groups. To take advantage of a special-interest group, you need to know what group to target, how to find it, and what to do once you do discover it. You can target groups locally, regionally, or nationally, depending on your focus. Since most screen printers bring in less than $1,000,000 in annual sales, I'll keep the discussion focused on local and regional prospects.
The process of finding niche markets is really quite deliberate and direct. There's no real mystery to it. You'll have to do some research, ask the right questions, and know where to go to get the information you need. Let's start close to home. Take your own personal special interests, for example. These are things you enjoy doing. They're often hobbies or recreational in nature. A number of very important aspects become crystal clear when you think in these terms.
People are often emotionally connected to what they believe in. If you're really into bird watching, you know a lot about it. You know what birds to look for at any time of the year. You know which species are migrating and which ones are indigenous. You know where they'll be found and what you have to wear in order to remain hidden while viewing them. You know the behavioral characteristics of each species, what they like to eat, and where they gather. You collect all of this information in order to create the whole experience. We'll use this example throughout our discussion to illustrate the principles of niche marketing.
The people who buy products in a niche market realize the product and the value of the product are aimed specifically at them. The value to them is clear, and they reward the niche marketer with better profit margins because their emotional wants influence them to pay a higher price for goods and services. Psychologically speaking, you're satisfying the need of the market for recognition, and you're providing the communication vehicle they'll use to show the world exactly what's important to them.
Let's compare the emotional purchasing of the niche buyer to the needs of a general market. For example, a customer is shopping for the lowest price on a two-color design on 144 white cotton T-shirts. There is no emotional connection here, only the satisfaction of finding the lowest price that meets the requirements of the job. Customers in the general market will consider your price and reply with something like, "You're seven cents more than the guy down the street. Can you come a little closer?" And so begins the death spiral of crashing price.
You'll often find yourself in this situation when you deal with volunteer clubs, organizations, or school groups. Volunteers who contact you haven't made any emotional connection to the process of marketing their group or cause. Their only motivation is to get the best price because they simply don't understand what really makes an effective garment promotion.
Finding the niche
Honing in on the market areas where you can set yourself apart from your competition is the key to not falling prey to the generalist customer. Begin with the areas where you know something—your own special interests. The more passionate you are, the higher your likelihood of success. Passion equals emotional connection, and this fuels the niche market. Let's build on our example of bird watching.
Bird watching is a definite market with specific needs. But is it big enough to support your marketing efforts? Your research will provide the answer. Head down to the local bookstore or magazine shop. You want to find one with a broad periodicals section. The more magazines, the better. A magazine can survive on a much smaller market base than a television channel can. Bird watching may not be part of the Outdoor Network, but it will have its own special magazine(s). Generally speaking, the thicker the magazine, the bigger the market. More people are looking, so more advertising can be sold. National magazine markets are 350,000 or less when you look at a specialized book. You'll find all kinds of magazines on bird watching, bird conservation, bird hunting, and so on. You've now determined that bird watching is likely a viable niche.
If you really want to drill down, go to your local library and settle down in the reference section for a few hours. There you'll find a remarkable reference book called SRDS (Standard Rate and Data Service) that will help you identify and obtain mailing lists and advertising demographics on every published magazine in the US. The information in this book is fascinating. You can find out exactly how big any market is by simply looking up the topic. Chances are if there is a magazine for your topic, there's enough base to support a niche.
Your afternoon of work at the library has led you to determine that there's more than enough interest in bird watching. Your next step is to obtain several of the magazines in your interest area. This is where your personal interest comes in. If you're already a bird watcher, you have a jump start on the process. Now you need to expand your reach by becoming an expert in your field. This step is very, very important. You must be absolutely believable in your efforts. If you create designs around the current migrating species and you get the colors wrong—or, heaven forbid, the species wrong—you're dead. Niche markets are passionate. Potential buyers know all the details. The more details you know, the more believable you are. This knowledge makes you special. You will sell product.
Study the magazines cover to cover. The more work you do here, the better off you are. You're interested in the articles and the advertising. You want to know what the hot buttons are. It could be conservation efforts (saving wetlands or endangered species). You're looking for anything that will create an emotional connection with the reader—your potential customer. If you see the same kinds of information in several different books, it's probably important.
Of course, don't forget the Web. You'll find an incredible wealth of information online. The Web offers even finer resolution of information and markets. You can find very, very specific sites on just about any aspect of your market. The Web is a wonderful research tool for narrowing focus and obtaining very detailed and specific information that's laser targeted to your market.
Your next mission, once you're armed with specific information about the niche, is to identify your local market. How many businesses in your area are focused on bird watching or related activities? Do you have a local chapter of the Audubon Society? What conservation groups are in town? Are there any events or festivals centered around your interest area? How about school clubs? Now you're doing homework on a local level.
The more information you gather, the better off you are. Not every market will pass muster. You're after two key attributes. One is the size of the market. It has to be big enough to support shirt sales. Secondly, buyers must be passionate. The more passionate, the smaller the market can be. The more emotionally connected the buyers are to the cause or interest, the more they will pay for the right design. Make some phone calls to key individuals in the community. Find out what's important to them and what the issues are. If you can find a cause, you have sales.
Designing for the niche
The next step is to design garment graphics that fit the niche market you've defined and validated. Most niches are small; therefore, your local opportunity for quantity sales is limited. The larger the market, the more competition. Your objective is to fly below the radar and own the niches in which you choose to work. Typical sales will be in the 72-288 range. To expand your opportunities, you'll need to create images that you can use for the same purpose in multiple regional markets. Leverage your efforts through syndication.
Create specific graphics with the intent to reuse them (Figure 1). If you know the Western migration of the Coastal Snowy Plover occurs between September and November and extends from Washington's Puget Sound to Baja, California (I just made all this up!), you can pretty well define where you can sell goods oriented toward this event—and for how long. This allows you to make an annual, limited edition, commemorative shirt (Figure 2). If you make it available for only two months of the year and personalize it for the coastal towns with wetlands, lagoons, back bays, and refuges along the West Coast, then you're not very likely to run into any competition.
Furthermore, you can afford to invest several hundred dollars into a really great design. Find a noted bird artist and create a hang tag around the design that promotes the species, the artist, and conservation efforts. You can charge a little more for each garment and make a local donation to the conservation efforts in the area. If you go this route, be very careful to follow-up and actually make the donation. If you don't, you expose yourself as having less than good intentions. You will effectively kill all your current efforts and spoil future plans.
One thing about local donations is that when you get going locally with a nonprofit, you'll develop a powerful grassroots referral and advocacy for your efforts. The more third-party endorsements and testimonials you develop, the more you'll sell to your specialized market. Keep track of your donations. They can become sizable, quickly giving you added marketing clout. When you say that combined sales of your conservation graphics (Figure 3) have resulted in local donations totaling more than $10,000 last year, you get the attention of anyone even vaguely interested in raising money for conservation efforts. You can then leverage the efforts to create seasonal editions.
You've identified your niche market and sales are rolling in, but this is no time to slow down. Sales mean momentum. Momentum means cashflow. You need to establish your leverage base before you step back to admire the improving profit. The steps of selecting the niche market and implementing the product were the invention. Now we're going to the next step: invention extension. It's at this step that you firmly entwine your efforts into the lifestyle of your niche market.
If you think what you're doing is selling screen-printed T-shirts, I'm afraid you've missed the message. You're selling communication based on an emotional need to share with others the belief held by the target niche market. Printed apparel is part of the total experience, and the experience is precisely what you're attempting to capture. The more you live and breath your chosen market, the better your understanding of what the experience is all about.
To illustrate, take your conservation shirt. Not only could you sell a great, limited-edition, commemorative shirt, but you could also package it with a local map of the best locations to view the Coastal Snowy Plover, as well as other significant points of interest, places to stay, locations to eat, and so on. Incidentally, each of these locations may also be a potential retail outlet.
Oh, and don't forget to send press releases to the local newspapers and magazines announcing the availability and location of the shirts. Send the information to the local conservation group that benefits from your efforts to include it in publicity efforts. Now you're creating great art and creating demand for it at a local level.
All of this sounds like a lot of work, and it is. But there are a few things you need to consider. You're doing something none of your competitors is doing, so you'll have little if any competition. The competition you have lacks credibility because they don't understand what's driving your efforts.
Nobody said this would be a free ride. These ideas are simple, but it's definitely not a push-button marketing solution. If it were this easy, you would have a bunch of competition. Our objective at the very beginning was to differentiate ourselves so we could increase our profit margin. Hard work based on smart marketing practices gets that job done.
Do the math
Finally, all the work is basically templated. Once you've done the work, it becomes a matter of duplication. You know what you're looking for. You know how to qualify the market. You know how to target. You know how to personalize and localize. Let's review the math so you can see just how powerful this is.
Say your preprint designs sell for$7.50 each. An order of 72 shirts is $540.00. Six orders in a geographic market amount to $3240.00. Picking 10 geographic markets yields $32,400. If you plan properly, you can get one reorder in a limited season, so the life of that design is $64,800. Repeat the process during the next season, and you double revenue again. So, at the end of the first year, sales on two designs to one niche market amount to $125,600. The value goes up when you add new designs. You repeat the process each time you add a market. As you can see, carefully researching, targeting, and selling into niche markets can easily generate close to $1,000,000 annually within a couple of years.
Mark A. Coudray
Mark A. Coudray is president of Coudray Graphic Technologies, San Luis Obispo, CA. He has served as a director of the Specialty Graphic Imaging Association Int'l (SGIA) and as chairman of the Academy of Screenprinting Technology. Coudray has authored more than 250 papers and articles over the last 20 years, and he received the SGIA's Swormstedt Award in 1992 and 1994. He covers electronic prepress issues monthly in Screen Printing magazine. He can be reached via e-mail at firstname.lastname@example.org.
© 2006 Mark Coudray. Republication of this material in whole or in part, electronically or in print, without the permission of the author is forbidden.