Niching down – how to identify market segments to focus on

Looking to optimise your marketing strategy? Our industry experts share valuable knowledge for actionable results.

Published by 

Alexis Pratsides


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You’ve worked, planned, invested, mapped out a digital marketing strategy – and finally, you’ve got your business up and running. 

You know who you are, what you’re selling, and who you’re selling to. You’ve found your niche. Or so you think. Somehow, you’re not getting the consumer response you were banking on. You’ve flatlined. So what’s going on? 

Chances are, during the heady days of planning you cast a wide net. Too wide. 

It’s natural to want to target as many consumers as possible – but resist the temptation. If your promotional strategy isn’t talking to a specific consumer group, a big chunk of your efforts will land in a black hole.

Instead, narrow your focus. Niche down.

marketing focus customer segmentation

Finding your focus

The global market is massive, and growing – but so is the competition to reach it. Plenty of fish in the sea doesn’t guarantee you a great catch – especially when so many other businesses are fishing the same waters. 

And some of them are market leaders in a broad range of industries – Stripe for payments, Salesforce for sales, Mailchimp for email marketing, for example. 

That doesn’t mean there’s no room for you. There are specific-use cases and regulations in each industry that these market leaders may not be able to cater to. That can give you a foot in the door and gain traction.

The key: knowing exactly what fish you’re after, and how you’re going to get them to bite.

Niching down is about getting a clear focus on who your ideal target customer is, then aligning your marketing accordingly.  Finding your niche isn’t an end in itself: it should be part of your overall marketing strategy.

digital marketing customer engagement strategy

Who are you talking to?

As you developed your marketing strategy, you defined your buyer persona. Who are they? What are their pain points, and how can you help resolve them?  

But over time – and with ever-growing competition – the target audience concept can become too generic and broad to be effective. 

You want to optimize the impact of your marketing strategy – and that’s where market segmentation comes in. This approach creates the kind of targeted strategies that will engage people who are already interested. Instead of trying to persuade ambivalent consumers to give your product a try, offer it to the people most likely to say “yes”.

Market segmentation helps you identify potential customers, choose which customers to pursue, and create value for those targeted customers. In other words, it’s about breaking your target audience down into smaller categories – which allows you to address their needs more accurately and effectively.

The more clearly defined the audience, the more customized and impactful the message.

Making sense of segmentation

A segment is a well-defined group of people or organizations that match your ideal customer profile. In marketing terms, that means they share similar product needs and buying behaviour. 

To be successful in your approach to market segmentation, you must be strategic. Don’t arbitrarily pick something because it sounds good at the moment: your choice should meet some very specific, practical criteria that will make it worth your time, attention, and money. It should be:

  • accessible (otherwise your messaging is useless)
  • measurable (allowing you to assess current and potential market share)
  • substantial (making it worth your investment)
  • aligned with your brand’s values (your audience should be receptive)
consumer niche marketing tips

The bucket list

You may think you’ve already found your niche. But dig deeper. You’ll likely find multiple segmentation buckets to fill. Customize your customer segmentation by using key criteria. Among them:


Divide your customers based on their geographic location, which incorporates climate and rural/urban considerations. Brands that have a brick-and-mortar store may want to provide special incentives for customers who live near their physical location. Adopting a paid search management approach can help when segmenting potential customers, based on geographical location.


Demographics are a very effective way to target specific customers. Use tools like Facebook, Instagram, and Google Analytics to uncover audience demographics like age, education, gender, income, online presence, etc.


To connect with your audience, you need to know what’s on their minds and what they care about. Familiarize yourself with their hobbies, interests, lifestyles, and values. That way, you’ll be able to create content that consistently engages them, their friends, and their families.

Get to know them and begin relationship-building by meeting them wherever they congregate online.

behavioural digital marketing insights


Look at your audience’s buying behaviour. Build a profile based on their stage in the buying journey, their brand loyalty traits, purchasing style, product/service usage rate, etc.

Use your intel

If your business is up and running, take a look at your most profitable customers, and go by the 80/20 rule: generally, 80% of your sales will come from 20% of your customers. So focus on customers who make up the bulk of your profits. You want more of these!

Once you’ve created buckets of your major market segments, seek feedback from these customers on how you can better cater to this industry.  Try including more questions in your emails and social media marketing strategy. Generally, consumers are happy to offer information about themselves when it comes to their likes, dislikes, wants, and needs. 

Do a competitive analysis of existing players in your targeted niche. Is the market underserved, or at capacity?  Is it worth niching down? 

For example, if you’re competing against Stripe in the payments business, you may notice an emerging industry (like “electric vehicle charging stations”) that doesn’t have a lot of established competitors. If this is an industry you see growing, create a niche tool that will cater to that industry and grow with it.

niche customer segmentation marketing

Test it out

Create a customized framework that can give you a feel for whether your brilliant idea will flop or fly. Consider factors that will identify:

  • market potential
  • competition size
  • barriers to entry (industry certification, for example)
  • risk analysis (capital costs, market durability, etc.)

Then take an incremental approach. Start by gradually adding features to existing products that cater to your target audience. 

Ideally, your ideas will be validated by a positive consumer response. That’s your green light. Now you can double down and either spin off a new entity or rework the positioning of your existing company. 

What you’re left with: you – but better. So be smart about market segmentation: trim those nets!

Created by

Alexis Pratsides

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