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In terms of identifying a group of consumers who buy related products and services and share a common overall interest there are markets and there are niches. Actually if this were a college text book you'd find it gets a lot more complex but you don't even need to worry with that unless you just want to impress your friends.

A market is a broad, generally larger group of consumers that a company might target. For example video gamers represents a market of over 100 million consumers in the U.S. alone.

A niche, on the other hand, is a tightly focused sub-group within a lager market. And there are actually many different levels on which to discuss a niche.

For example gamers who enjoy sports games represent a more targeted group. But this still isn't a real niche.

We could dig a little deeper and say that people who like playing football video games is a pretty tight niche. This is actually acceptable, but we can do even better if we identify players who specifically love the Madden NFL series.

This has narrowed the field tremendously. Instead of looking at the possibility of targeting a market with 100 million participants and at least tens of thousands of competitors you are now looking at a much smaller market with fewer competitors.

And you could take things to an even tighter level of focus by looking at Madden NFL players who use the Xbox 360 platform. This has shaved your target market and competition down substantially.

You can dig deeper still: What about Madden NFL, Xbox 360 players who meet online with regular teams for tournament play?

I hope you're getting the idea. A niche market, in the truest sense of the term, is a very tightly focused group of consumers who are actively interested in spending money on products and services related to their specific focus.

The last part of the above paragraph is key. It's not enough to find a small group of consumers; you need to find a small group who is willing and able to spend money.

And although we assumed in the above example that a small niche means less competition this is not always the case. You'll need to verify the competition for yourself (using the methods shared in this report) to determine if a niche is going to be worthwhile.

It could very well be that thousands of businesses are struggling to cater to the relatively small number of Madden NFL, Xbox 360 players who meet online with regular teams for tournament play. If that turned out to be the case you would do well to keep looking for the perfect niche.

And there are many, many good niche markets just waiting to be exploited. You can find one you enjoy, and one with a hungry core of consumers who are all armed with credit cards.

It takes a little time and some common sense to find the right niche. But it's not rocket science and you don't need to sit in front of your computer for 12 hours a day reading an endless stream of confusing data to make the right decision.

In fact there are loads of great tools readily available to help you target exactly the right niche market. Major corporations spend millions of dollars on so-called market research, but the data they end up with is actually less sophisticated in many ways than what you can have access to using basic keyword research tools.