Oct 23, 2008

Performing Market Research

Introduction

There is a common misconception about the term “niche ” and how go about finding a niche industry. You cannot simply find a keyword that is receiving a lot of traffic, does not have anybody bidding on the search term, and assume that it is profitable "niche". There are many factors that contribute to a profitable niche (affiliate programs, supply vs. demand, industry conversions, etc.), most of which require research and then the corresponding analysis of the “niche” before implementing your campaign and actually promoting to this market.

In this section we are going to discuss how to find a niche industry and how you can find profitable niches or “small pockets” within industries that can then become profitable campaigns.


What is a niche market?

Before we get started on how to discover niches, we need to define exactly what a niche market is. A niche market is a group of people searching for a solution to their problem and not being able to find too many relevant results. A niche is usually a smaller component of a larger industry. This is where the advertiser can take advantage of a niche and receive low-cost and highly relevant traffic to their website. It is much easier to target the audience within a niche than the broader topic as you will be able to understand and target the needs of this audience much more precisely

How to Search for a Niche Market

One thing you should understand is that only 15-20% of all keywords available are advertised under...and there a literally millions of keywords online! Often times a niche market is based of the premises that the keywords receive large amounts of traffic, with little or no advertising competition for them. This is simply not the case as there are many, many keywords out there that are untapped and entire niches that have not been exposed yet!

First we will define for you exactly what a niche looks like. Thinking too broad will limit your research capabilities. For instance, say you are looking to promote a product within the automobile industry. Obviously the search term “automobile” is not a niche market as it is too broad and next to impossible to convert. Let us show you how to we dig down from a keyword as broad as automobile and find many different niches.

Automobile
Car, truck, van,
Sports car, race car, luxury car, family car,
Red sports car, blue sports car, yellow sports car
Red convertible sports car, red hatchback sports car
Red convertible sports car tires, red convertible sports car rims
Red convertible sports car racing tires, red convertible sports car winter tires
Red convertible sports car Yokohama racing tires

In this example, we started with a keyword as broad as automobile and we expanded upon it, digging down several tiers until we found a niche. “Red convertible sports car” is a niche, but “red convertible sports car Yokohama racing tires” is a smaller more targeted niche. You can take any keyword and break it down into smaller niches to obtain the first component of a “niche market”. We're not saying that you should go out and sell Racing tires for a red convertible sports car, but this is how you can dig down to find niche markets. Here is another example

Make Money
Make money, internet, investing, real estate, stock trading
Make money investing, make money network marketing
Make money investing in real estate in Vancouver
Investing in vancouver condo real estate

Investing in condo real estate in Vancouver, BC Canada could be a niche industry. However, the second part that is integral to the make-up of a niche market is the profitability factor. Although you have maybe found niche section of a larger market, if there are no affiliate programs or no ways to generate revenue through this market, it will not be the "right" niche to start with (unless you feel like wasting your money)!

Market Profitability

We need to find out if a market is profitable. If it is not, we are not going to promote it. Conversely, if there are opportunities available within this industry, we are going to take advantage of them by expanding our research, doing an analysis, and implementing a campaign. The thing the most people don't understand is that you can make almost any niche a profitable one if you understand who the consumer is and perform an adequate level of research on the niche.

To gauge the profitability of a niche, we need to find out what the consumer demand is. We can do this research several different ways:

Expand on Higher Level Markets

Expand on higher level niches using the Keyword Research Tool. Select a higher-level niche. In this example, we will choose “sports car”. You are going to want to find out if there are niches within this industry that receive traffic and in which people are searching for. The first thing you will want to do is search this term within a keyword tool such as the one offered here at WA. This tool will help expand your research and allow you to "dig" under certain search terms to reveal more targeted niches.

Problem Statements

Search for problem statements using the keyword tool. This will often time reveal “niche markets”. Examples of problem statements are “cure, fix, repair, solve, get rid of, how to, etc.” When people are searching a lot for a solution to a problem, chances are this is a profitable industry. Take advantage of these broad niches by digging down (as in our automobile example), and find smaller, less competitive niches.

Using Forums/Groups

People use forums, groups, and blogs to communicate their concerns and essentially they are looking for a solution to their problem. Here is what we do on occasion and find it is great for finding “niche markets”. When visiting a forum, look at the common questions people are asking “how do I fix my slow computer, how do I lose weight without dieting, where do I find a wedding dress for cheap, etc.” Research these niches and find out if you can make them profitable. Using forums and groups will reveal many niches and you can literally take what people are talking about, and turn them into campaigns.

To find forums within a particular industry, you should do a search within Google.

Search: INDUSTRY/NICHE + forum

Obviously you want to replace the INDUSTRY/NICHE with the actual industry or niche that you are looking to find a forum within. Here is an example:

gaming + forum

This yielded many gaming forums. You can now use these to perform your market research.

Here is a list of some groups to utilize for research:

Google Groups
MSN Groups
Yahoo Groups

Supply & Demand

Supply & Demand are two separate components of a successful niche, but they both have to exist in order for a niche market to be profitable. If there is a lot of demand for a particular niche, but no products or affiliate programs available, there may not be much opportunity to make money as an affiliate. This does not mean that there is not opportunity promoting it entirely. Many marketers develop an information product or an e-business around a specific niche that they have found.

We typically search for demand for a particular niche prior to researching the actual supply. If there is no audience, there is no opportunity and in order to have a niche you need demand. However, supply can come in the form of a new product that you could develop or obtain, therefore supply can come from you. Using keyword tools is great way to find out whether or not an “niche” receives much traffic or not. Here are some good tools :

  1. WA Keyword Research Tool
  2. Google keyword tool
  3. WordTracker.com
  4. Alexa.com
So you find a “niche market” that is getting a ton of traffic but there is no product out there that you can promote to make money with. There are two different types of products that you can build around a niche – digital product and tangible goods. A digital product usually comes in the form of an e-book or software (BeatingAdwords.com, WealthyAffiliate.com), where you charge for information or services. Tangible goods (like baseballs, cars, or iPods) are sold through storefronts such as eBay or independently owned ecommerce sites

Creating A Product

Creating A Digital Product

There are many informational niches that are next to impossible to find good information about, unless of course you know where to get it. People will pay for this information when they cannot easily find the information for free, or find it all in one place. There are also software solutions that would be beneficial to many users and increase efficiency that could be developed within many industry and niches within these industries..

There are services available that allow you to build a product without having to do the research or write the actual information yourself. You can use services such as Elance or Rent-a-Coder to do the work for you in exchange for a price that is decided upon prior to the work. They are typically much more cost-effective than an expert copywriter or a software developer.

You then can in turn put your product on a digital product marketplace such as Clickbank.com or Paydotcom.com for a price that you decide upon. Just because you have a product does not mean it will be profitable, however if you promote it properly and fill the void of the niche market there will be great profit potential. Here are some affiliate/merchant networks that specialize in digital products.


Creating a Tangible Product Business There are still untapped niche markets where people are looking for tangible products. Whether it is toys or sporting equipment, we recommend that once you have found a niche market, that the first place you go with it is eBay. eBay is the largest online marketplace in the world and is the perfect place to try selling products online. Obviously you will have to find a company to provide you with your products (lots of them will ship for you too), but once you have that in place you will be ready to start your own retail business

Cool Research Techniques

(1) Over 590,000 Niches

Access to 590,000 niches is at your fingertips. Not only are they free to access, but they are organized in a logical way, allowing you to break down high level niches to find sub-categories that you could easily promote to.

There is a website called dmoz.org that has been around for quite some time. People have never realized the power in this open-directory project. This is in fact the largest human-edited directory on the web listing over 4.8 million websites and 590,000 categories.

Here is a link to the site:

http://www.dmoz.org

(2) Finding Industry and Niche Trends

Interested in following the hottest trends? Well we do. There is a great tool out there and it is provide by a company that you have probably heard of…Google! Good ol’ Google coming to the rescue with some timely and relevant trend information for us to utilize for our research.

Jumping on trends works great! At any time of the year there will be stories and products that people are following online and offline. You can take advantage of these stories and leverage their hype; you will be able to milk them for all they are worth. This requires relatively quick action on your part, but if you are quick to the drawing board, there is great potential.

Each day Google releases the top 100 trends within its Hot Trends section. You can find this by using the following link:

http://www.google.com/trends/hottrends

You can also get historical and seasonal data using Google Trends:

http://www.google.com/trends

(3) Going to the “Shopping” Mall to Find Niches

Imagine if you could sit in the shopping mall and ask people exactly what they are buying or what they are looking to buy. This would be great, wouldn’t it? What we are going to show you is something called the “Consumer Demand Index”. This is basically a sophisticated term for “What People Are Shopping for Online”.

This index can be found on Shopping.com, which is one of the largest shopping and consumer review networks online (and owned by ebay). Here you will find a wide range of different products and niches that you can use to accelerate your research.


http://www.shopping.com/top_searches

Tools & Resources

Below we have listed some research tools that will help you with your "niche" research.

Research Engines
www.dmoz.com
www.mooter.com
www.snap.com
www.shopping.com
www.alexa.com
www.google.com/trends


Keyword Tools
WA Keyword Tool
Google Keyword Tool
WordTracker.com
KeywordSpy SEO Tools

Groups
Google Groups
MSN Groups
Yahoo Groups
MySpace.com

Conclusion

In this tutorial we've covered some techniques that you can use to find niche markets, and shown you how to do market research. Although finding a niche market seems to be complex and most people think they need the "right" niche to succeed, this is simply not the case. You can make money promoting just about anything online if you understand what your niche is and the consumers within it. This is the key to success within any niche.

When doing your research, you will always stumble upon other industries and have many "light bulb" moments. Because of this, we highly recommend that you ALWAYS have a pen and paper available to write down your findings. Market research is an integral part of making money online, and the more research you are willing to do, the better off you will be

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