A niche market refers to a group of people within a larger market that possess similar interests. In automotive repair a niche market can be defined in a number of ways such as demographically (age, gender, etc.), make of vehicle driven, business or consumer and more. Niche marketing can be an effective way of gaining a leadership position as the field of competitors is narrowed considerably. Serving a particular niche also narrows the number of potential customers so care must be taken in employing this strategy. It’s imperative that the size of the market and potential market share be defined clearly and realistically. Overestimating potential market share can bring disastrous consequences. Following are keys to defining an automotive repair niche market:
- Clearly Define the Target Market – Niche marketing involves targeting a particular segment of a market. Many factors can be built into the definition of a target market such as demographics and special interests. Examples of niche marketing in automotive repair would be vehicle type or performance. The greater the number of rules applied to the definition the smaller and more specialized the market will become.
- Determine the Size of the Market – The size of a niche market can be estimated by finding the number of potential customers that fit the target market definition. General demographic information can be found for most cities by doing an Internet search on ‘[city name] demographics’. This information can tell you the number of people that live and work in the area along with gender and income levels. This will allow for a rough estimate of the total number of vehicles in the area. So if the owners of a specific make of vehicle were the target market a simple sampling of a parking lot or neighborhood in the area would yield the percentage of vehicles these comprise.
- Estimate Potential Market Share – How big a slice of the market can be earned is a critical component in evaluating market potential. If there are companies already servicing the same niche then potential market share will be impacted.
- Gauge Revenue and Profit – After estimating the number of potential vehicles to be serviced – the next step would be to determine the annual service requirements for the pool of prospective customers. This will yield the potential sales and along with projected costs – the estimated profit.
- Redefine and Evaluate if Necessary – If the potential revenue and profit figures are not positive then the target market definition may be too stringent. It may be necessary to define a broader target market and reevaluate.