By: Dawn Waldron
This paper presents a coaching-centred model for finding a business niche with the aim of helping coaches and complementary therapists identify the market segment that they are best suited to serve. The author discusses classic niche marketing techniques and adapts the theory to provide a new model for identifying clients that takes into account the values and life experience of the coach as well as commercial considerations in order to target a group that is willing and able to buy the service presented.
The biggest challenge facing the qualified coach is finding a supply of regular clients. With the majority of coaches having less than 10 active clients, and most of these reporting 5 or less (ICF, 2008) the ability to earn a living from coaching is debatable. It is widely accepted that coaches are more successful when they establish a niche for themselves but the evidence shows that few coaches exploit the potential of this idea.
Over half of qualified coaches have obtained an advanced degree, and two-thirds place great emphasis on professional development but relatively few come from an established marketing background (ICF, 2008). Such emphasis is placed on authenticity and integrity that commercial sales and marketing models have little appeal. A model is needed that sits happily within the caring culture of coaching.
This paper presents a new marketing model which combines business analysis with a coaching approach to help small businesses identify a market niche that makes economic and emotional sense, allowing them to measure success by evaluating profit and purpose at the same time, without sacrificing one for the other. It is a useful model for coaches and for their business clients.
Niche Marketing Theory
Niche marketing is the process of identifying a defined segment of people who are likely and able to buy a specific product, and tailoring a proposition to suit them.
The theory derives from the market segmentation model, an economic and marketing theory, which divides purchasers into groups with similar needs, for example gender, occupation, health. By grouping consumers in this way it is possible to target them efficiently and address them directly (Lake, 2009).
In the early 1900s manufacturers were selling to undifferentiated markets. The new industrial age meant that most customers were satisfied with standardized goods, typified by the Model T Ford (Harvard, 2005). As competitors entered the market the need for differentiation increased.
In the early 2000s the surge of internet marketing made it easier to design and promote very specific product offerings to clearly defined groups. This kind of marketing is ideal for small service businesses with modest marketing budgets.
Small businesses do not need a large segment to be profitable; they can operate at either end of the standard distribution curve where there is less competition for customers and more scope for offering superior service and choice (Anderson, 2007).
A Business Approach
Large companies use quantitative multifactor analysis to identify market segments in order to identify profitable new groups of consumers and reduce the risk of new marketing ventures. They assess the whole market seeking untapped opportunities, studying buyer behavior including frequency and total spend, as well as the factors that prompt buying decisions: a costly process. They may carry out supplementary research into the more profitable-looking segments to identify market growth potential, competition and accessibility of consumers (Harvard, 2005). The body of data is analyzed for segments, which offer the closest fit for their product; occasionally the research leads to a completely new product for a new segment. They will relate it to the company’s existing customer base, identify pockets of new opportunity, possibly new marketing partners and select a profitable niche (Neilsen, 2011).
Large-scale market segmentation usually takes place when a company has achieved substantial market share in one segment of a market and is looking for further areas to diversify into. They have the budget and capability to carry out the work to a high level of rigor.
Smaller businesses, with fewer resources, aiming for a stake in a market, can adapt the classic model to suit their capability and budget. A good starting point would be to decide either to sell a specific product or serve a key market. For example, a clothing manufacturer may start with their product, aiming to attract a group of young executives or whereas a service provider may identify an affluent market segment of 50-year old women and design an offering to appeal to them. There is still a need to ensure your product is attractively priced and promoted but taking an cool, objective look at your market to see what is missing makes good business sense before you leap in with a new product.
Many coaches, however, will not be satisfied simply with choosing an efficient, profitable niche. Nearly 65% of coaches are dedicated towards personal development (ICF, 2008) for themselves and their clients; there is likely to be a pull towards more personal and meaningful ways of selecting a niche.
So how can coaches keep the benefits of the business model and make it feel more meaningful?