Niche Market: Marketing Strategy and Advantages (2024)

There is not much differentiation between brands when it comes to certain products, like dishwasher tablets, toilet paper, detergent, or bin bags. "Why?" you might ask. The companies that produce these products want to target ask many customers as possible and create a universal appeal. Therefore they create a product and standardize it to reach a large customer segment. But what happens when a company wants to target only a small subsegment of consumers? Let's find out.

Mass vs. Niche Market

Most markets are made up of one dominant market segment and a couple of smaller segments. The dominant segment is known as the mass market, whereas smaller segments are known as niche markets.

Niche Market Definition

Niche marketing involves outlining and understanding the needs and wants of customers in a small (niche) market segment. Niche segments are usually created by identifying needs and wants that are not addressed by the mass market or by other businesses.

A niche market is a smaller segment of a larger market. In niche markets, customers tend to have very specific wants and needs.

Niche segments tend to be small; the number of consumers and the quantity (volume) of products or services consumed tend to be lower than other market segments. The type of products or services niche market consumers demand is usually very specialized, distinct, or unique. Due to this specialization, the price of niche market products and services tends to be relatively high, or at least higher than mass-market products. Niche producers tend to sell their products online or through individual retailers.

Mass Market

Mass marketing is a strategy in which businesses decide to target an entire market with their product or service. It is a type of strategy in which a company sells to the most prominent part of the market.

The mass market is a large part of the market. It includes a general and broad consumer segment.

Mass marketing tends to ignore the differences between consumer segments. Instead, it sells to everyone. Products or services tend to be relatively standardized and hold universal appeal. The idea behind mass marketing is for everyone to be a user of the product. Mass marketing aims to reach as many consumers as possible.

Generic brands appear as a result of mass marketing.

A generic brand is a product without a universally recognized brand name or logo.

These types of products are usually not advertised. Sometimes generic brands are synonymous with a product, meaning consumers treat the brand name as if it were the product.

Mass and niche marketing strategies play a significant role in market targeting. Once customer segments have been identified, marketers must target their chosen segment with their targeting strategies. The two main targeting strategies are niche and mass marketing.

Check out our explanation of Segmentation, Targeting, and Positioning to learn more about the STP Model.

Using a mass marketing, or undifferentiated marketing strategy, the company focuses on what all consumers have in common rather than their differences. As a result, companies using this strategy create products and marketing campaigns that target and relate to all consumers in a market. However, it is hard to appeal to everyone in a market, so many companies use niche marketing strategies instead.

On the other hand, marketers might use a niche marketing strategy to target a smaller group (or smaller groups) of consumers. Here, after segmenting the market, the marketer looks for specific differences in customer segments and decides to fulfill only one group's wants and needs.

Keep in mind that niche marketing only works if the marketer can profitably fulfill these wants and needs.

As a result, the marketer needs to define niche segments specifically so they can optimize the products and campaigns directed to the group. A niche marketing strategy also allows companies to optimize their resources, focusing on a small group. Large, established companies often ignore or underserve these groups, presenting an opportunity in the market for smaller firms.

There are many different niche and mass-market brands you have probably heard of. The following section will outline an example of each.

Niche Marketing Examples

One example of a company targeting a niche market is Lefty's e-commerce store. They are an online business that targets left-handed people by selling specific products tailored to left-handed use. They have segmented their customers based on whether they are left-handed or not and have created a niche segment by identifying a gap in the market.

Other businesses were not meeting the needs and wants of specific left-handed consumers. As a result, they have come up with unique and specialized products (like oven mitts, office supplies, and gardening tools) that are made specifically for left-handed consumers to address this gap in the market. The business has created a niche segment for its products.

Niche Market: Advantages of Niche Marketing

• Less competition, as not many firms offer the specialized product or service.

• Clear objectives and aims to reach the specific target segment.

• Customers could be easier to find and reach.

• The company gains market expertise due to the specialized skill set required to manufacture the product or operate the service.

• Can often charge a higher price and benefit from higher profit margins.

• More loyal customers as limited options exist.

Disadvantages of Niche Marketing

Niche Market and Mass Markets - Key takeaways

• A niche market is a smaller segment of a larger market. In niche markets, customers tend to have very specific wants and needs.
• Niche marketing involves outlining and understanding the needs and wants of customers in the small (niche) market segment. Niche segments are usually created by identifying needs and wants that are not addressed by the mass market or by other businesses.
• The mass market is a large part of the market. It includes a general and broad consumer segment.
• Mass marketing is a strategy in which businesses decide to target an entire market with their product or service.
• Mass market products or services tend to be standardized and have universal appeal.
• There are several advantages and disadvantages to both niche and mass marketing.

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