It’s no secret that part of the equation for making money online starts with effective targeting. Marketers who have the most success online are those who target their markets first and then find products to serve those markets. Breaking a larger market apart into small bite sized chunks that share common characteristics is called niche marketing. Niche marketing is very powerful because it can give you some real insight into the people who will be buying from you.

For example, say you’re trying to sell toddler t-shirts. The kids clothing market is a massive behemoth that’s very competitive and can be very difficult to get penetration in with a new site. There are many other players and brands in the market to compete with, who already have an established base. However, if you break this large market apart into smaller segments and focus on selling a very specific product to a very specific customer, you have a much better shot at getting qualified buyers to see what you’re selling.

In practice, instead of trying to sell “toddler t-shirts” you could try to sell a hyper-focused product, like “1957 Chevy Toddler T-shirt”. It’s true that less people are hunting for this small niche product, but the people who are hunting for it are very likely to purchase it if you have what they’re looking for, since the competition is so much lighter. More qualified traffic leads to higher conversions which means more profit in your pocket… isn’t that the whole point?

Like I said before, the truly profitable projects don’t start with a product, they start with the market. If you locate a market that’s loaded with people and limited in competition, then you’ve found some (potentially) low hanging fruit. The next step is to find out what they want and are willing to pay you for. It becomes much easier to sell products that have a voracious gaggle of consumers ready and waiting to pounce.

I usually spend a little time each week hunting through public sites like http://pulse.ebay.com/ or http://www.whatthetrend.com/ or http://www.google.com/trends. These sites give me a pretty good overview of (respectively) what people are buying now, what people are talking about now, and what people are searching for now. This is like my trifecta of public opinion. The internet consumer is a wily and fickle beast that can change its collective mind on the drop of a dime, so what works on Tuesday might not on Wednesday.

After you come across something that seems like it might be worthwhile, you have to get some more details on whether you have located potential niche market. There are a handful of tools out there you can use to get some numbers on traffic based on keywords, most notably the Google Keyword Tool or Google Insights. However, if you’re like me and you want to make some serious money online, you should probably pony up the minimal change on a specialized market research tool. I personally use Market Samurai and consider it one of the best apps out there, hands down, especially for the money. It’s also a very active product that’s constantly getting updated.

Using Market Samurai, I can determine how much traffic is out there in a particular niche, what the competition looks like, what other related keywords are, what content is out there relative to those keywords, the PageRank and value of that content AND post my own content to a blog. It literally shaves hours off my schedule.

So may basic workflow is this:

1. Find trend worthy of research
2. Plug keyword into software and analyse
3. Find additional, related keywords to original with a tighter, more specific focus (niche)
4. Determine how much competition there is for that niche

Once I’ve decided that a niche is a good target market, then I use my various product sourcing or affiliate sites to locate a relevant product for that niche, set up shop and market to it.

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