How to evaluate a market niche for your member website or other information product

The key to success as an online information marketer is feeding a starving crowd.

A starving crowd is any group of people who share an enthusiasm for a topic and are passionate enough about it to spend their money to learn more. They’re “starving” for more information.

This creates an opportunity for you, the information provider.

Don’t get overwhelmed by all these questions. Fortunately, thanks to the Internet, there are some relatively simple ways to find the answers and test your premises about the information products you might develop.

But almost everyone new to the information product development business gets this vitally important detail wrong. And then they fail without realizing that their mistake could have been avoided. Here’s how:

What most experienced product developers say not to do

Do not create your product first and THEN try to figure out who to sell it to and how. Find the market segment first, then create a product to help fulfill that market’s demand.
Do not fall in love with your product to the extent that you are blinded by reality. The fact that you love your product, or niche subject, does not equate to there being a starving crowd that shares your enthusiasm.
Do not fail to explore niche markets solely because you suspect they aren’t large enough to buy an information product or support an online newsletter. There are potentially profitable markets with a few as 2,000 people in them.
Do not assume what you haven’t proven. Instead, test everything. Measurement ends speculation and argument.

Strategy precedes tactics

The beginning of this process is strategic. After you’ve developed a strategy, you can be more “tactical” and actually create the product.

Start by getting a well-formed outcome or clearly defined goal for your project. Learn to ask these important questions before you create an information product.

Big Question #1: What information product do you propose to develop?
Big Question #2: Who are the prospective customers for this product?
Big Question #3: Do these prospective customers typically research and buy information online?
Big Question #4: Do these prospective customers have the money to buy this product?

Get a clear idea in your mind who it is that comprises the niche market you propose to serve. What is the demographic and psychographic profile of this group’s members?

Now don’t be put off by those 25-cent words.

Demographics is the study of who your most probable customers are in terms of their sex, profession, age, income, education and location (among other things).

You’re simply trying to define whether the group is comprised of men or women (or both), what they do for a living, what is their typical age range, what income bracket are they in, what social standing they have, and possibly what geographic area they live in.

In other words, what is it that your target market has in common?

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The underlining reasons why people purchase what they do is called psychographics. But you don’t need to do a psychographic profile in order to get started. That’s an exercise you can do after you’ve found a market for which you want to develop your product. More on psychographics later.

Niche market defined

So just exactly what is a niche market, anyway?

A niche market is a narrowly defined group of individuals who share the same specialized interests and needs.

For the purpose of creating an information product, especially a membership website, you might want to focus of a very small niche—possibly as few as 2,000 to 5,000 people.

Because the narrower your focus, the more you can charge for your special, proprietary information.

For instance, you don’t necessarily want to reach all model train enthusiasts, but a subset of that group. Perhaps that subset or narrow niche comprises all 000-guage model train collectors. Or comprises a subset of that group that only collects 000-guage trains and memorabilia associated with Lionel brand trains. Or comprises a subset that collects only trains and accessories dealing with the years from 1900 to 1921.

Tactical questions to ask

What benefits can you offer that are especially appealing to this group?
What are their values? What are their “hot buttons” and how can you press them?
How can you reach or contact this group? Are they online? Do they prefer to get information about their hobby online?
Is the group sufficiently large to provide enough customers?
Has the group been overlooked by other marketers?
Can you create an new or unique information product for this group?
Can you communicate compelling reasons for this group to buy your information product?

How to look for the answers

Let’s say you’ve answered the big four questions as best you can and you want to test whether you assumptions are correct.

For example, you want to know if your interest in restoring antique cars is a topic sufficient for creating an information product or a membership website. You imagine that your customers would be well-heeled men, ages 35-59, who love to go to antique car shows, can afford to buy a car for restoration, and have sufficient time and aptitude to learn car restoration skills.

You believe these men are computer literate and regularly surf the net looking for information about classic automobiles, including cars for sale, car clubs, car shows, and, you hope, information on how to restore old cars.

Creating a test

Now you want to test these hypotheses.

Begin by creating a list of keywords and phrases that these potential customers might search for that would lead them to your information product or member website through search engines.

The secret is to discover the words and word combinations as they would be likely to be phrased by people doing an Internet search.

This part is crucial to your success. The words you think of to describe a topic may not be the words that others would use to search for information about a niche topic.

Now supposing your hobby is classic cars and you know how to buy, restore, show and sell classic cars. You think you might be able to produce an information product, possibly even a membership website, on the topic of classic car restoration.

You might assume the keywords for your niche topic are “classic cars,” classic car restoration,” and “antique automobiles.”

Let’s find out.

Checking out Good Keywords

Search engines like Overture, Lycos and Teoma provide Web-based utilities that enable you to find clues about the popular searches being made. Good Keywords is a simple program that enhances some of these utilities. Knowing the right keywords to target is very important because the product that your site offers must be found easily by the prospective customers who are searching for information using Overture and other search engines.

If you want to explore the popularity of your proposed words or word combinations on the Overture, Lycos and Teoma search engines, you can start by logging on to Good Keywords.

About Good Keywords

Good Keywords is a free Windows software program for finding the perfect set of keywords for your web pages. You can download and install the Good Keywords program in less than five minutes.

To use the software, click on the “Overture” tab in the program and type in the main keyword(s), then press “go.” The software will connect to the Overture website and retrieve all the related searches for that word. You can use the Lycos and Teoma tabs similarly.

Alternatively, if you only want to see the Overture results, you don’t need to download Good Keywords. Whether you download and install the free Good Keywords software program or simply use the Overture URL, the first set of results you get will be the same.

When you enter the words “classic cars” on the Overture tab and click go, the search engine returns 214,397. That is the number of times the phrase “classic car” and its related terms have been searched by Overture users in a single month.

Here is the entire list that Overture returns:

When we double click on “classic car restoration”, Good Keywords returns the following list:

When we double click on “antique automobiles”, Good Keywords returns the following list:

At first glance, it would appear that thousands of people have made queries about classic cars, although fewer than 10,000 have searched for information about classic car restoration. Still, that’s a respectable number, so you might want to proceed to the next step.

An alternate scenario

Supposing instead of classic cars we had tested another set of words. Supposing we were interested in exploring the possibility of developing an information product about ice carving.

When you enter the words “ice carving” on the Overture tab and click go, it returns 1,570. That is the number of times the phrase “ice carving” and its related terms have been searched by Overture users in a single month.

Here is the entire list that Overture returns:

So, would the topic of ice carving be a good choice for developing an information product? No. At least, not during the warmer months. And probably not at all.

Can they afford it?

Now we have gotten some evidence to help us partially answer Big Questions 1, 2 & 3. There do appear to be sufficient Internet surfers with an interest in classic cars. What product or membership site we should develop for them is not yet clear, and before we answer that question, we need to answer Big Question #4.

Do these prospective customers have the money to buy information about classic cars—restoring, buying, trading and exhibiting them?

Do your prospects have credit cards? Do they have sufficient disposable income?

This is another critical concern, because if your target market is comprised only of dreamers, without the money to participate in their dream hobby, then it doesn’t matter how much interest they have. They simply can’t afford your product!

Many information products have failed owing to erroneous assumptions about the prospective market. Either the product developers (1) mistakenly have assumed the prospective market can afford the product, or (2) they mistakenly assumed the kind of information the prospects want.

There is no definitive way to know for certain if your prospective customers have credit cards. Today, many college students and even some high school students have been issued credit cards by business-hungry banks. Even people with less than sterling credit ratings may qualify for debit cards that will enable them to do online transactions.

So the answer to whether your prospect has a credit card is an unverifiable hunch. Make your best guess. Use your intuition.

Scouting your competitors

The next question to answer is whether anyone else is succeeding in this market. Who else sells an information product about restoring antique automobiles? What is it? Who buys it? How much does it cost?

While it is often an advantage to be the first into a market with a proprietary product, it’s also risky. Large companies with deep pockets can afford to do extensive research and development and be the first to introduce a wholly untried product. But most individual entrepreneurs can not afford to risk too much time or money before determining if a market exists for their product.

So without “reinventing the wheel,” it’s useful to know if anyone else is selling a product similar to the one that you have envisioned. Knowing that you will have competition strongly suggests that a market already exists in this niche. And that is a good sign.

Competition is direct evidence that a market exists for your product.

Here’s how to find that evidence.

Go online to the Google search engine at www.google.com. Click on Advanced Search and enter your search term in the Exact Phrase box. In the with at least one of the words box type ebook, ezine and newsletter.

Click Search and note the number of results that Google returns. Using the exact phrase classic cars with the words ebook, ezine and newsletter, Google returns about 91,000 entries.

Browse through 20 or 30 of the top entries and you get a good idea that other people have created ezines about classic cars.

Now add the word restoration to the Exact Phrase box, and click Search. Now Google returns fewer than 40 entries, and not much that resembles a competitive information product.

At this point, we have very little evidence that an information product on classic car restoration would sell well. Based on the results of our Google search, there do not appear to be many (if any) information products on classic car restoration, even though there is considerable interest in the subject of classic cars.

Another product search

Are there existing ebooks on classic car restoration being sold online? Two places to check are:

ClickBank shows no information products on classic car restoration listed for sale.

The eBay site shows only one—a 166-page, illustrated, hard copy book that is designed to “help the do-it-yourself restorer avoid costly mistakes and problems commonly encountered. In essence, it covers what the factory manual doesn’t tell you, information that can come only from firsthand experience.”

You can buy the Classic Car Restoration Restorer Tips Techniques Guide on eBay, without bidding, for $11.99.

The psychographics lesson

Why are there so few information products on the subject of classic car restoration, even while so many people appear to be interested in classic cars?

Perhaps many people who love classic cars can’t afford to buy an antique automobile. They may have a credit card, but they don’t necessarily have the disposable income to buy and restore an old car.

However, they may indulge their desire to get closer to their dream of owning a classic car. They may buy magazines and photographs about classic cars, and they may attend car shows where they can look at classic cars and meet the owners of classic cars. They may be prospects for an information product about classic cars, but not for an antique car itself. They may be prospects for a book of pictures of classic cars, but not for a book or membership website on the subject of restoring classic cars. These are important distinctions.

On the other end of the economic spectrum are those people who love classic cars and can afford to own them. They, too, like to attend classic car shows where they can buy, sell and swap their antique automobiles.

But neither group necessarily wants to restore classic cars. The first group can’t afford the hobby. The second group may not want to get their hands dirty. If they want an old car restored, they might rather pay someone else to do the restoration work for them.

Again, all these are assumptions that must be tested to know for sure.

At this point you might be discouraged. You’re still dreaming about selling your expertise about how to restore antique automobiles, but so far there is little evidence that there is a market for your book or membership website.

Successful classic car restoration websites

Despite obvious, easy-to-find evidence to the contrary, there is a successful membership website devoted to car restoration enthusiasts. Second Chance Garage focuses on the process of car restoration. It provides in-depth, how-to articles, monthly garage tips, product reviews, auto theory, and explains the technical workings of automobiles such as how an engine works, how brake systems work, etc.

An annual subscription to SecondChanceGarage.com is $34.95.

Occupying an even smaller niche, Shoebox Ford Advisor is devoted to helping owners of 1949, 1950, 1951 Fords and Mercurys with restorations, technical information, and hard to find parts. Membership is free.

These may not be the kind of numbers you were looking for to support development of an information product on classic car restoration.

Deciding whether to proceed

According to the legendary direct mail marketer Eugene M. Schwartz, there will almost always be a market for anything to do with the following subjects:

Making money
Astrology and the occult
Health, including natural cures
Cooking
Magic
Exercise, fitness and losing weight
Handicrafts
Beauty, including how to lessen the effects of aging
Sex
Psychology
Investing

Your chances for success at creating and marketing an information product or membership website will be increased if it fits into one of these categories.

Alternatively, there are many small, under-developed niches that could hold riches for the right publisher.

The decision to proceed depends on your resources—both time and money—and your belief in yourself and your product.

There does not appear to be a “starving crowd” for an information product on classic car restoration. Most experienced information product developers would advise you to quit the classic car restoration product right now and proceed to another project.

Others might advise you to follow your bliss and create a wholly new product for this niche market. It might be an ebook. Or it might be a complete classic car restoration training program of tools, a manual, and video tapes, for which you could charge hundreds of dollars.

Only you can decide how much you want to risk to pursue your dream, or to find your starving crowd.

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Comments

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