How Niche Is Your Market?

The last man who envisioned the automotive market as a homogenous mass was Henry Ford, and it didn’t take him long to realize that selling one model in one color to satisfy every single customer wasn’t the best possible business plan. Most modern markets are no different, with a seemingly ever-growing list of market niches that the savvy service provider or retailer can serve.

Just like Henry Ford, though, it’s not possible for a business owner to be everything to everybody. You need to specialize, at least to some extent, in order to maximize the return on your investment in facilities, parts, and equipment, not to mention the demands on your technical knowledge.

Selling to each market requires a specialized knowledge base, too, since the customers in each one are motivated differently. If you are in the automotive aftermarket, for example, you know that the people who build and drive nitrous-powered dragsters aren’t generally the same ones who tear around dirt ovals in restored 1930’s roadsters. And the baby boomer replicating his ‘55 Chevy dream machine differs greatly from his son or daughter bolting some speed onto their first Honda Civic.

As Chris Sutton, owner of the Street Rod Garage in Grant, Alabama, says, “You’ve got people that are original equipment freaks most of the time on the restoration side of it. You couldn’t give them a street rod. But street rods guys, you couldn’t give them an original.”

Sell what you know for customers you know

Most small business owners follow their own interest into the niche markets they serve. It’s a natural choice, since they tend to know what people like themselves are going to want and have the technical expertise to provide it. Beyond that though, serving a special market successfully requires paying particular attention to customer communication.

John Pruitt, owner of John’s Rod Shop in Abbeville, South Carolina, has been studying his customer base for a long time and understands them very well. “Generally, my customer who builds a car is in his late forties or better,” he says. “They want to reach back and touch that nostalgia. They say, ‘I had one of those when I was a kid, or Dad had one of those, and I’d like to have one.’”

Pruitt’s shop builds street rods from the ground up as well as performing maintenance and repair on muscle cars, modifieds, or early model speedsters. He follows a strict routine with his customers. “The first thing I try to find out when a customer calls me is what kind of car are they looking for,” he says. “The second thing we want to know is what they want the car to do for them. Do they want a car they can get in and drive to California and be comfortable at interstate speeds? Or do they want to build a street bruiser that they can get out here and drive like a race car?”

This process doesn’t stop after the initial meeting. Pruitt adds, “As you complete the project, you have to be in continual contact with that customer so he knows what’s going on and he knows where his money’s going.”

Dave Donelson, author of The Dynamic Manager's Guide To Marketing & Advertising: How To Grow Sales And Boost Your Profits a how-to book for business owners and managers.