This year’s workshop on the Research&Results in Munich was all about researching niche markets. Together with MWResearch, a renowned market research agency from Hamburg, we’ve prepared a case study about the growing market for natural cosmetics.

The starting point of our presentation was an answer to the question, why niche markets are relevant to our industry. According to Chris Anderson, author of “The Long Tail”, the formation of niches will continue as the internet will make it every time easier to produce niche products, to offer niche products and to purchase niche products. This leads to a more and more fragmented market and makes it harder for companies to identify the most promising growth segments and trends.

This is exactly where market researchers come into play. While quantitative research methods can offer a realistic overall picture of the different market segments, the analysis of small niches may lack the required granularity to derive detailed and reliable conclusions. Qualitative studies, on the other hand, may get a grip on the typical drivers and barriers of a small segment, but can hardly be generalized to the general population.

In our case study, we’ve combined both approaches to analyse the growing market of natural cosmetics. While the quantitative study followed the strict requirements on representativeness, our research community literally had a more creative approach. We recruited people who tended to refuse the purchase of natural cosmetics but preferred to produce their cosmetics at home (soaps, creams, masks, etc). Even though the incidence rate among the general population was ridiculously low, we were absolutely sure that our participants were experts in the manufacturing process and could provide us with well-grounded feedback. Last but not least, these participants had an own interest in sharing their ideas, as there is no suitable product available for them. In addition, they have never met anyone with the same hobby before.

Our strategy worked out quite nicely! With almost 43,872 words written in the course of two weeks (which corresponds to approx. 150 printed pages), our 29 community members gave us a lot of valuable insight into their ideas, how the market for natural cosmetics should develop. And, to our surprise, their perspectives corresponded perfectly to the long tail theory on the formation of niche markets.

Even though the market for cosmetics is naturally offline-based, its future may be in line with the online trends. For example, our community members came up with the idea of having product configurators for creams, where they could select their own set of ingredients. Or, in a different thread, as the users of natural cosmetics are rather critical consumers, they are also demanding when it comes to communication. Therefore, the brands of the future need to be transparent and ready to dialogue with their customers. Don’t these ideas match perfectly with the internet, with mass customization and social media?

So, all in all, the internet is facilitating the formation of niche markets. While this is obvious for online products, we see an indication that the same mechanisms are also affecting offline products. This led us to the conclusion that users of whatever niche products are likely to be found online. And this is why online research might be a good choice when approaching niche markets. It has a wide-ranging toolset of qualitative and quantitative methods that can be combined flexibly when approaching niche markets. So naturally online, that’s how niche markets should be researched!

View on Slideshare: Natürlich Online from Florian Tress