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Niche Strategy in Marketing: Definition & Concept

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  • 0:04 What is Niche Marketing?
  • 0:46 Conceptual Framework
  • 2:06 Example
  • 2:57 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
While some companies want to conquer the world, some just want a piece of it. In this lesson, you'll learn about niche strategy in marketing. You'll examine the different guidelines for getting into niche marketing and look at an example.

What is Niche Marketing?

Niche marketing encompasses all activities in which a business engages to attract and establish long-term relationships with customers comprising a small segment of the total population.

Conceptual Framework

Some people incorrectly believe that the more potential customers to which you can appeal, the better the chance of success and profitability. This is not necessarily the case. Businesses that attempt to appeal to everyone will spend a great amount of resources developing and marketing many different products in hopes of appealing to everyone. Products with mass appeals often cannot command premium prices because there are numerous substitute products in the market serving general consumer interests.

Your business may grow big by thinking small, if you can develop and serve a niche market. In order to develop a niche market, the following guidelines are useful:

  • Identifiable and unique needs: Members of a niche - a small segment of the larger consumer population - must have needs in common that can both be identified and that are different than the general needs of the overall consumer population.
  • Sufficient size: Going small may be great, but there are limits. The size of the niche must be sufficiently large enough to support a business. For example, while there may be some people in the United States that are into dining on insects, it is very doubtful that there is enough people that dig eating insects to support a gourmet insect food company.
  • Uniquely suited product or service: Your product should be able to serve the needs of the niche market. You don't necessarily have to be the only business serving the niche market, but you do need to be able to distinguish your product or service from niche competitors. Offering superior customer service or quality of product might be sufficient differentiation to give you an edge over the competition.
  • Ability to communicate: Since niche markets are small by definition, you must be able to find a cost-effective way to locate potential niche customers and communicate with them.

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