The first and largest box should represent the top-level customer - who is your product for?
For example, Lululemon sells activewear and is focused on active people.
The next layer is now defining the specific traits and/or characteristics shared by those within your target customer segment that make them the ideal target customer.
For example, when Lululemon started out, it was specifically focused on Women’s wear (Yoga clothes for women, to be precise - we’ll get to that in a second).
Lastly, we have the behaviors that our target customers with the following traits will typically do and what needs or challenges they face as a result of those behaviors.
Lululemon, as mentioned before, was focused not just on active women’s wear but on yoga clothes specifically.
These two final boxes represent the niche that we are seeking to target.
You may find yourself going back and forth between 2 or more different niches in those final boxes, and that’s fine. The canvas is designed to help facilitate your thinking, help codify, and easily explain your niche in a clear way. It won’t however give you all the answers - the thinking is still left up to you!
Expansion Path
One of the reasons why this canvas is drawn as boxes sitting within one another is because each box represents a broader (or narrower) slice of your market.
For example, Lululemon creating Yoga clothes for women is a much smaller market than, say, activewear in general (across all sports and genders).
Now, this niche canvas can also be a powerful tool to help you define and think about your expansion path. One day, you’re going to reach a market cap in your chosen niche, and more than likely, you’re going to want to expand.
The ‘Niche Canvas’ is also a powerful tool for thinking about your expansion path as a business and product.
To continue with the Lululemon example:
- they started with women's yoga clothes,
- they then expanded to yoga clothes for men and women,
- and then into fitness clothes in general,
- more recently, they’ve begun to branch into spaces like footwear, gym accessories, and everyday clothing.
Expanding into yoga apparel and equipment was a logical first expansion step for Lululemon but yoga is ultimately a smaller industry than activewear and fitness equipment - even if it was only for women.
Now, this is an important concept to consider when defining your niche. Some niches can be too ‘niche’ and you can become trapped without a logical space to expand into.
For some, that might be completely ok. They might be fine with not expanding and happy to service their niche indefinitely. However, for most businesses, we like to expand - it’s great both from a revenue perspective and also to de-risk as we diversify our revenue lines and continue to innovate.
So whilst ‘niching down’ is a powerful tool and absolutely where most businesses and products should start, we must be mindful when defining our niche that we have a way forward, that there is a path to expansion, and that we haven’t backed ourselves down a dead-end street so to speak.
