The same products and services you sell to an exiting market could end up even better suited to a potentially more lucrative, yet smaller niche market. Develop that niche and you can increase your profits.

If you’ve done your market research and kept on top of customer service, you have a good idea about who buys what you sell, and why. That’s marketing data you can use to identify niche markets.

Let’s say you own an office supply store. Your existing customer base is small-business owners and home office professionals. Within that base is a niche market—customers interested in environmental protection. To reach that market you can promote the recycled paper products you sell.

How does that increase your profits? For one, you can focus your marketing dollars and resources on the niche market, reducing the cost of marketing to a larger audience. And two, you may be able to charge more for your recycled paper. Customers may be willing to pay a premium to protect the environment when buying their office paper.

Here’s another example. Let’s say you sell widgets to end-user widget aficionados who buy one widget at a time. It may cost you $50 in market research, manufacturing, raw material, marketing, sales, delivery and customer service for every $200 widget you sell.

That’s a nice $150 profit on each widget. But wouldn’t it be wonderful to reap dozens or even hundreds of sales for the same $50 in costs? You can if you find a way to sell your widgets in bulk to other retailers and distributors. Suddenly, you have niche market made up of re-sellers. And that increases your profits as well as your production.