Marketing for Hardware Startups: Why Using a Niche Market Strategy is a Great Idea

In business, there is no such thing as guaranteed success. A number of factors influence the fortunes of a new startup, and many of those factors will remain firmly out of our hands.

As a hardware entrepreneur your objective is to try and stack the deck in your favour as much as possible.

One way you can do this is by tackling a niche market. A niche market is making a specific product that targets a small, well-defined market segment that can be profitable enough to scale and grow a business. It is important to remember that you’re not creating a product and finding a niche, but creating a product that will suit a niche that you have already identified. You do that by focusing on making a product that solves a certain problem for a set of users. Let’s take a look at the benefits of focusing on a niche market strategy and examples to help your hardware startup here…

Niche 1

The first and most obvious advantage of a niche market strategy, is that it reduces your competition and narrows your focus, which in return gives you a clear idea of how to sell your product to that niche audience.  If you use a niche market strategy you should have a clear differentiating factor in either your features or services which redefines your market and gives you a competitive advantage. In the Startup Owner’s Manual by Steve Blank he says, “Would some part of an existing market buy a product designed to address its specific needs? Even if it costs more? If so, think niche strategy.”

As a hardware entrepreneur a niche market seems appealing because it requires less capital to enter the space and compete the existing competition. A great example is fitness wearables, Fitbit is one of the main market leaders in the health wearable space. It would be very difficult for a new player to enter the space and take them head on unless they are a company like Apple, but for a hardware startup whose capital is limited has to focus on competing where they are not. One startup that is doing this is Blocks. This company made a modular wearable device that allows you to remove pieces of the band with different sensors inside so you can track different metrics. Modularity and customization was their differentiating factor to what Fitbit is doing.

Marketing Opportunities

Another consideration when you target a niche market are the marketing opportunities. A few advantages you receive are:

  1. Communities will often form around smaller niches, which give you lots of opportunities to connect with them and focus your marketing efforts to become an authority figure in that space.
  2. As you might imagine, marketing to a niche audience is also going to be significantly cheaper because you are only promoting your product to a target audience which limits the range of people needing to advertise to. Then most customers who discover your product will most likely buy from you because you are solving the exact problem they have or you are offering a unique feature or service that competitors aren’t.
  3. Having a niche market also allows you to charge more for your product and gives you better margins because you are not competing with the bigger players on price. You are offering a higher quality that is targeting people who care more about a particular benefit in which there are fewer options.  A great article which talks about niche market phenomenon in economics terms can be read here. The article references the beef market but the concepts are the same.

Niche 2Building a Community

As you can imagine, the kinds of people who are passionate about a smaller niche market tend to be vocal in their support for its products as long as they’re good, as they develop an ‘us against them’ mentality. Harness this by entering into dialogue with the community online. Ask them for feedback in forums, or on social media. Offer them useful and free information. Become a trusted leader of the community. Once you do, you will create loyal supporters which offer a great route to market of your own.

Here’s a pretty good guide to building a community around a new startup or product launch.

Growing out of your Niche

Another great advantage of niche markets is that by starting out small you can own that space and become profitable. Then you can re-invest into the hardware business to make future products that address a largest portion of your market cause you have the capital and resources to do so.  A prime example of a hardware business that started out small was GoPro now look where they are at.


Even if you intend to go big later in the game, starting in a smaller niche can be an excellent way to get your foot in the door and build market share and a loyal fan base of consumers. More and more niche hardware products are hitting the market due to the greatly reduced costs of getting a product to market. It no longer takes mass appeal to build a profitable hardware business. 

Let us know in the comments section below about the niche markets you think are ripe for a new hardware innovation! Are there any tips you have for fellow makers who are developing their go to market strategy? How niche can you go, before the dearth of consumers outweighs the positives? Do subscribe to our newsletter to receive regular updates on the latest startup news.

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