Shawn has a masters of public administration, JD, and a BA in political science.
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.
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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.
Let's say that you live Seattle, Washington and are a kendo - Japanese fencing - enthusiast. You are sick of the corporate grind and have developed some strong friendships with some people in Japan on your semi-annual trip to compete in kendo tournaments. You have access to excellent wholesalers of kendo equipment and supplies right out of Japan. You also have researched the number of kendo participants in the United States from information gathered by the national association and see there are sufficient numbers of kendoists active in the United States with a significant concentration on the Pacific coast. You decide to start importing high quality and authentic Japanese manufactured kendo equipment since you note there are only a handful of national competitors who only offer discount level equipment. You have just decided to compete in a niche market.
A company engages in niche marketing when it seeks to develop unique products or services for a specific piece of the overall consumer population. Before entering into a niche market, you must first be able to identify the target population, identify its unique needs and ensure that it is large enough to support your business. You need to design your products or services to uniquely serve the needs of the niche population and be able to find and communicate with potential customers.
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Niche Strategy in Marketing: Definition & Concept
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