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What is a Niche Market? & Why is it so Important!
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Marketing is an essential part of the business. Companies use various marketing strategies to attract customers and to boost their sales. If you are also part of an industry and looking for ideas to increase your sales, then read this article to learn about a unique marketing technique called niche marketing technique. You can use this marketing technique to create business even when the market you are part of has reached a saturation point.
In this article, you learn about what is niche marketing, the definition of niche marketing, the advantages of niche marketing, the disadvantages of niche marketing, and popular ideas for niche marketing that you can adopt in your business.
There are two paths for entrepreneurs. You can either serve the mass market or a niche market. Entrepreneurs who serve a mass market usually create many products or serve multiple industries. However, they struggle to become the market leader for each of their offerings.
This is different for entrepreneurs in a niche market. These entrepreneurs create specific products or serve specific audiences. Besides allowing you to narrow your scope, serving a niche market helps you gain more credibility and become the go-to brand for your audience.
In this post, you’ll learn about the benefits of niche markets, how to find your niche, and what to do after you identify an unmet need.
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Niche marketing is a type of marketing method where the advertising methods of a company focuses on a particular segment of the market. Companies create a niche market to expand their business. The niche market can be created by identifying the needs of a specific sector of customers and by creating a product that mainly addresses the needs of that group. Companies use this method to provide solutions to problems of a small section of customers, which were not discussed by other competitive firms. In this way, they gain a competitive edge over their competitors.
A niche market is not always a small market. But it consists of a small group of population or target audience with unique or specialized needs. By entering a niche market, a company becomes a pioneer in the market, and there are chances that other companies might also enter the market. The leader company will always have an advantage over the new companies entering the market.
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However, entering a niche market is not always full of benefits. You might end up losing money if you don’t analyze the market properly before entering into it. Therefore, companies not only analyze the market segment but also make use of niche marketing methods to inform their target audience.
The clothing industry is one of the most exploited sectors. It has reached its saturation point. Therefore, companies are looking for market segments that they can use to boost their sales. For example, now companies rather than selling clothes in standard sizes are focusing on selling clothes to over-sized people. This niche market segment is known as “Plus-sized” or “Over-sized” Clothing line.
Similarly, companies are also focusing on niche markets consist of pregnant women. Finding comfortable and fashionable clothes is a problem that every pregnant woman deals with. Therefore, companies use this opportunity to sell “maternity clothes” for pregnant women. These companies make use of niche marketing methods to advertise their clothes to their target customers.
First, I would like to share with you the meaning of a niche market to understand the definition of niche marketing.
The niche market can be defined as a market segment or a small segment of the population for which a particular product is created. The main aim of a niche market is to fulfill the needs in the form of price, features, and qualities of that specific population segment.
And niche marketing can be defined as all marketing efforts concentrated on the unique market segment rather than marketing to the whole population. The section of a group can be differentiated based on their demographic location, profession, lifestyle, needs, culture, and habits.
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The followings are the advantages of niche marketing.
The first benefit of niche marketing is reduced competition. If you identify the needs of a particular segment of the audience before your competitors, then you will not only earn additional profits but will also enjoy zero to low competition. There are various benefits of having reduced competition. You don’t require to limit the price of your product because of your competitors.
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Entering a niche market just because your competitors are not exploring this segment of the audience is not a great idea. Because there might be reasons for them to overlook the business opportunity. If your competitors are not entering the market because they don’t see it as a profitable market, then it is not suitable for you.
But if your competitors are not entering the market segment because they can’t meet the needs of the market, then you are at an advantage. Therefore, it is essential to analyze a niche market opportunity before entering into it.
Another advantage of niche marketing is improved relationships with consumers. The niche market usually targets a specific group of people. When you focus on a particular group of people, then you have an opportunity to connect with them on a personal level. Unlike other marketing methods, you don’t create advertisements targeted to a mass audience. You use marketing methods that are relevant to a specific segment of the audience; in this way, you can connect with them on a personal level.
Moreover, having a small customer base has another advantage. You can learn about the requirements and preferences of your customers and can provide them personalized services. For example, if you are in the catering business, then you can provide food services to individuals as per their requirements.
You can learn about the foods they like and the food they are allergic to, and using this information; you can create daily meals for your customers. Besides this, you can also communicate with every customer using a personalized approach.
For example, your one customer might like to talk over the phone, and other like communication through emails. A small customer base allows you to connect with your customers using the communication methods preferred by them.
People part of a niche market are usually connected. They share information. Therefore, you can get the benefit of word of mouth marketing. Let us take the previous example.
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If you are in the catering business and you provide food services meeting with the individual requirements of each customer. Let us consider that you are providing three meals a day to a diabetic patient by taking into consideration his needs. Then he will share word of mouth with other people with diabetes that he knows, and you will get more business.
Word of mouth is the best perk of being part of a niche market. The best thing about word of mouth is that you don’t have to spend a penny on it, and there are high chances that word of mouth will get you, loyal customers.
Niche marketing helps in strengthening your position in the market. By entering a niche market, you show that you care for the problems of people that all other firms have ignored.
This not only makes your specific customers happy but also improve your image in the eyes of your other customers. Niche marketing will help you get recognized by people who will bring you business at the place of just being popular with the help of social media advertising.
Getting acknowledged by the right people is more important than getting recognized by many people.
Creating a marketing strategy requires a lot of time and effort. Companies are required to understand their audience to create an effective marketing method. To do this, they are required to do research and dig in-depth data. Thorough research involves a lot of time and effort, and many a time, companies fail in identifying the actual needs of their customers.
However, in niche marketing, a company focuses on a particular segment of the audience with distinct and specific requirements. Therefore, once you know what the particular needs of your customers are, then you are not required to spend your time and effort to find out the latest trends in the market and demands of mass customers.
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You can use these resources in creating the right product for your customers rather than just spending them in creating an opportunity.
Every business person likes to become a pioneer in a market segment. Being a pioneer has certain advantages. For example, you have an opportunity to acquire the most significant portion of market share, and everyone who will follow you will have a small market share.
You will be the leader of the market, and you will have certain privileges like deciding the price of products. Moreover, initial, you might enter a market considering it as a niche market and end up having a full-fledged market.
Niche marketing helps you in finding different business opportunities. Sometimes, you come across a business opportunity just by being in the market. For example, if you are running a catering business, then you might consider vegan food as more and more people are becoming vegan.
You will not only get a business opportunity but will also get a chance to work for a cause.
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Niche marketing will bring you, loyal customers. In niche marketing, you address the specific needs of customers. You provide a solution to them to a problem they were suffering with, but could not find a solution for it.
When a company addresses their issue and show them that they care about them, then feel connected with the company. They will not just promote its products and services to others but will also become loyal customers. Loyal customers are the customers that every company needs to become successful and to stay in business.
Niche marketing is the least costly than any other marketing method. You require less investment to produce goods as you are not mass or producing these goods. In addition to this, you are not necessary to run expensive marketing and advertising campaigns.
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Because the size of a niche market is usually small. You can reach your customers through personal communication methods, like email and calls. Moreover, in niche marketing, your customers are your advocate, if they are happy with your product, they will promote it to their kith and kins willing.
Niche marketing improves the Goodwill of your company. If you are selling products that are good for the environment or humanity, then people will respect your brand.
For example, a company that uses eco-friendly packaging or produces animal cruelty-free products are recognized in the market, and they have more loyal customers.
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When a company enters a niche market. It researches about it and is aware of the in-depth details of the market. For example, when a clothing company decides to produce maternity clothes for women, then they are required to know the problems women face during their pregnancy and what type of clothes they feel most comfortable.
They start their production process only when they have relevant information. The risk of failure reduces when a company enters a market fully prepared.
Niche marketing is focused on a small group of individuals with specific needs. That means the size of customers who will be interested in buying your products is small. Therefore, your chances of enjoying large profits are low.
Your business might be a success, and your customers might love your products, but because of the small size of the customer base, you can’t increase your profit margin.
It is challenging for companies who enter through niche markets to survive. If their idea becomes successful, then large companies might use their plan to enhance their business. Therefore, it is challenging for small companies to grow and survive in a niche market.
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If you are already part of the market, then you might find a niche business idea from your customers. Pay attention to what they say and what they want. You might use this information to convert into business opportunities.
However, if you are planning to enter the business through a niche market, then you might find ideas from the people living around you. You can observe the problems they face daily and can start a business to full-fill their needs.
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When people need something unusual, they search about it on Google. People who might need your help have no idea of your existence. Therefore, it is a brilliant idea to invest in PPC marketing.
In this way, people can know about your business and service by merely searching on google.
You can start your niche business along with your already established business by providing services to small customers and expand your business through word of mouth. More your customers will like your service, they will talk about it, and your business will grow.
It is said that opportunities come your way only once. This is also applicable to the business world. Look for new opportunities and adopt them if you find them exciting and profitable.
You might get an excellent business idea from your competitors. Therefore, always keep an eye on what they are up to and adopt their unique ideas to become one of the early birds in the market.
About Andries van Tonder
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I am a Digital Marketer and an Entrepreneur with over 40 Years of experience in Business and Marketing. Business is my passion and I have established myself in multiple industries with a focus on sustainable growth. You will generally find me online at Markethive , Facebook, Twitter & Instagram
