Every industry has a niche market. The thesaurus defines niche as a specific area of marketing that has its own particular requirements, customers and products. One thing you need to keep in mind is that the ‘niche’ only exists because the market wants it to.
You might want to check Market Segmentation: Know Your Customers
Niche: Small or Specialized?
What Exactly is the Niche Market?
Niche is not synonymous with ‘small’ but is rather associated with the term “specialized”. Niche marketing is a technique deployed by many companies who want to target a particular market segment. They identify the customer needs and wants and attempt to deliver a solution to their problem.
For example, there are several right-handed musicians but very few left-handed ones. Taylor Guitars decided to tap into that niche market and now is the market leader in that sector.
What Are the Advantages of Niche Marketing?
There are different points of interest in niche marketing. One of the advantages is that there is no or little competition for the market leader in that segment. The evolution of our mature marketplace, along with the technology that allows consumers to be in control, has created a seismic shift from one-size-fits-all mass markets to millions of markets of self-interest. All mature markets inevitably evolve into this kind of economy, driven by ever-narrower markets of desire and ever-narrower facets of individual self-identities.
The company is able to build a strong relationship with its consumers improving its brand name and increasing its customer loyalty. These businesses often earn supernormal profit as their customers prioritize the service rather than the price. Since the product is targeting a specific group of people, the demands for these goods are often inelastic. This is what makes niche goods are often more expensive than normal goods. Without high profits, the companies will not be able to compensate for the lower sales.
What Are the Disadvantages of Niche Marketing?
Companies targeting the niche market are unable to reach economies of scale- lower costs per unit- as they have comparatively lower sales. These companies may not sustain in the long run for inadequate sales. The company’s chances of survival substantially decrease if it solely focuses on the niche. Being too successful in this sector may attract unwanted competitors making it difficult for the smaller firms to remain in the game.
The niche sectors are typically saturated so if there is a change in consumer demand, new entrants in the market (those who have yet to go into full-scale production) will be able to adapt their products to meet these new demands and take over the market.
How Does Niche Marketing Affect Economic Growth?
Economic growth has a proportional relationship with the consumers’ ability to buy. The choice is as important of a factor as the price is for several customers. A more important feature for consumers is having the opportunity to choose. KFC is undoubtedly a very efficient restaurant chain serving thousands of fried chicken to its customers. Honey’s Kettle Fried Chicken, however, is able to tap into the niche market that demands more flavor and variety in their chicken.
If a particular sector attracts the attention of multinational brands, it will increase the standards of the product and provide premium quality goods. These big companies can utilize economies of scale and offer more options to consumers. Multinational companies are unable to tap into the regionalized and personalized demands of goods and services. This is where the domestic firms come in. They are able to understand the needs of the residing customers better than their international competitors.
Entrepreneurship and Employability:
The demand for niche products offers a window of opportunity to entrepreneurs who wish to start up their own business. This initiates several small businesses and surges employability. Smaller businesses promote an understanding of employee-employer relationships which not only increases job satisfaction but also productivity.
What Are Some Examples of Niche Products?
Have you ever noticed that niche products are almost always associated with long-tail keywords? ‘Fried Chicken’ is a common product whereas ‘Spicy Honey Glazed Fried Chicken’ is a niche one. The longer the tailed keyword is, the better the niche product.
Food and Drinks:
Food and drinks play important roles to customers with special needs. Gluten-free or dairy-free products are two hyped niche products.
Organic Fruits and Vegetables:
They may be more expensive but these products are naturally grown without the use of chemical pesticides.
Stainless Steel Drinking Straws:
These straws bring a touch of elegance to your dining table. They also discourage the use of non-biodegradable plastics which are harming the landfills.
Eco-friendly and Cruelty-free Products:
The consumer market is now conscious of the products they use. They pay special attention to the method of production and packaging of the goods. Beauty products are under constant scrutiny and sell better when they are cruelty free or have recyclable containers. Even if a certain item is frequently purchased by the mass market, there will always be a niche number of consumers who will embrace and prefer a greener alternative.
Ergonomic Controllers for Long Gaming Sessions:
There are over two billion active online and offline gamers all around the world. And they are willing to pay a hefty sum to ensure their gaming experience is sublime. Companies began to produce ergonomic gaming controllers to ensure long gaming sessions without a single crick in your hand.
Books are initially sold in hardcover copies. Avid fans are willing to pay more to get their hands on the newest edition first. Hardcover books, especially older ones, are extremely valuable in the collectors’ market. They also make wonderful souvenirs and collectibles for any book aficionados.
In conclusion, the rise of niche brands and products has shown a positive change in the overall economy of the country. Small and medium sized firms are able to take advantage of their size and cater to the very specific needs of their customers due to their production capacity.