What is niche marketing?
Niche marketing is a specialized market offering focused on the needs of one tightly-defined market segment.
Usually the niche marketer only offers a very limited product range to this segment. As a result, the niche marketer builds a reputation (brand equity) for being THE expert for providing their products to the market segment.
Advantages of niche marketing
- Little or no competition
- Strong relationships with customers
- Business stability
- Improved capabilities and skills sets
- Focused business (no strategy distractions)
- Price premiums
- Higher profit margins
- Generally unlikely to compete against very large firms (segment/offering is too small for them)
- Significant barriers to entry – market segment is too small for new entrants
Disadvantages of niche marketing
- Limited growth potential
- May be reliant on a few major customers
- More likely to be at risk from major environmental changes (e.g. technology, economy)
Examples of niche marketers
- Some consultants, with a specialized offering
- Many websites, particularly blogs
- Retailers with unusual or specific merchandise, e.g. selling toy soldiers only
- Specialist engineering firms
- Non-traditional education providers, e.g. Montessori
- Professional services, with specialized offerings
- Manufacturers of specialty goods
What is one-to-one marketing?
- One-to-one marketing is a different concept to niche marketing
- It involves tailoring an offering to individual customers (one at a time)
- Banks (with their databases) often use one-to-one marketing, as are many service providers who are able to tailor their offerings (hairdressers, consultants, and so on)