Niche marketing really refers to finding a group of people in a small "niche" market that have a need for information or a problem that needs to be solved. Niche marketers provide a solution for the problem or information about the problem that the niche is searching for. Niche marketers answer the needs of groups of people with similar interests and problems throughout the world.
Unfortunately, if you are a niche marketer it can often be difficult and time consuming to find a niche market. From a business point of view a niche market not only has to have a need for information they also must be willing to pay for that information and be in a large enough quantity to make it economic for the marketer to provide the information or solution required.
Often people advise new internet marketers to find a niche that they are interested in. The theory is that this will make it easier for you to market the product as you are genuinely interested in it. So, for example, if you collect model trains you would do some research on model trains. You might find that the market for model trains is very large and that there are a number of websites competing for visitors to their site. If the market is too large you would probably not be able to compete in it. You would then be best off returning to your niche of model trains and drilling down to find a smaller niche that you can compete in. This is called a micro niche. So, if model trains is your main market you may find that there is a smaller market for repairing model trains. Your research may tell you that people are looking for help in repairing their model trains but no-one or very few people are providing the help that is being requested. By the way, I know absolutely nothing about model trains - this is just an example.
Working in a niche that you are knowledgeable about and have an interest in is good sound advice except for one thing. Most internet marketers do not have one website. In fact, some internet marketers specialise in having hundreds of websites and others concentrate on just a few sites. Whatever the case you will need to find other niches to exploit if you are a niche marketer.
Finding more niches will involve more research. Once you have found your niche you will then be able to work towards providing a product or information for that market. First you have to find the niche market.
One of the best places I like to look to find a niche is at Amazon. If you log into Amazon and have a look at the items that are best sellers in each department and the items that are described as "movers and shakers" you can find a number of niches that people are interested in at the moment. Do some research using a good keyword research tool and you should be able to find a market that is waiting for your help.
One of the most popular places to carry out market research is ebay pulse. Ebay pulse provides free research on the items that are selling well on ebay at the moment. If an item is selling well on ebay you are guaranteed that people are out there looking for that product or something similar that meets their needs. The other great reason to look at ebay is you can find out the history of an item that you are researching by looking at completed listings. If you monitor these listings over a few weeks you will soon be able to identify the products that are selling well and the markets that are looking for that information.
Lastly I recommend that you have a look at yahoo buzz. Yahoo buzz lists the topics that are most popular on Yahoo at any given time. The problem with Yahoo buzz is that generally you have to look through quite a lot of information that won't be of any use to your niche marketing business because they are people seeking free information. For instance on Yahoo Buzz celebrities like Paris Hilton always are mentioned because there is always a lot of talk or buzz about her. It doesn't mean that people want to buy a product about her though. If you have time, go through Yahoo Buzz you can usually find a gem or two there if you are prepared to look for it.