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The advantages and disadvantages of marketing to a niche audience

Every business has a niche audience, a group of customers who most benefit and accept the product or service you are offering. Within these target audiences are also smaller subgroups.

They share certain characteristics, and have specific wants, needs, and preferences. These smaller subgroups are called niches, and are a rich source of marketing opportunities.

A niche market does not necessarily mean a small market, but does involve specific target audiences with a specialised offering.

When you set up your business to appeal to everyone, it ends up appealing to no one because you are a small fish in a big pond. No one is going to notice you with all the other noise out there. You’ll get lost in a sea of bigger, more established businesses and experts.

However, marketing to a niche audience means you are competing within a narrowly defined market segment with a highly specialised offering. Which means your business is now the ‘big fish in a small pond’.

For any business, holding the majority market share in a niche market is a great achievement. But on the flip side, for a business that wants to keep on growing, pushing beyond the niche market is a must.

Niche marketing works well when you understand the market. A thorough understanding of your market means you can identify the unique needs of your potential audience, provide new and compelling products, tailor your products in the right way, communicate efficiently with the target group and identify how you will position against your competitors.

Targeting a niche market is often where many small businesses start, with a single product that is of a single benefit to a niche segment of the market. By focusing on a niche market segment, small businesses can focus their resources on this subset of the market. Niche marketing can be a recommended as a start out business building strategy to most effectively utilise limited marketing budgets.

Rather than equate niche with “small,” think “refined.” As in targeting the needs, motivations and self-interests of a consumer group with such precision as to maximise the clarity of what would give you competitive advantage in their eyes.

In a keynote presentation to Brandworks University, consultancy firm Lindsay, Stone & Briggs defined the benefits of niche marketing. When marketers get it right, what they offer the niche is so valued by them :

– The marketer can charge a premium, reaping higher margins.
– Can platform the brand to drive share of wallet.
– Can experience rapid growth that makes up for the narrowness of the target.

Advantages of marketing to a niche audience

Less Competition
One of the benefits of a niche market is having little or no competition. When you have a highly specific product or service, there will be less companies out there with the exact same offering.

The more specific your product or service, the less companies there will be to compete against for customers, however, there will also be less customers looking for your product or service.

Reduced competition is only a benefit of niche marketing when there is a significant audience to compete for.

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Kristen McCormick, a US based Marketing consultant notes, “If your competitors aren’t targeting a niche because they can’t meet their needs, then that’s great news for you. If they aren’t targeting that market because it’s not lucrative, then you may not be at an advantage.” 4

Brand Loyalty Built Through Strong Relationships
Niche marketing makes it possible for businesses to build their brand loyalty. When you are engaging with fewer people, you can focus on the quality of those engagements and on nurturing your relationships.

And as you are building your products and services specifically around this customer’s needs, you are a true partner rather than a supplier.

Spending Less on Marketing and Advertising
Marketing to a niche audience makes it easier for you to save on your marketing dollars.

Instead of taking a shotgun approach to marketing, ie the more is better philosophy gaining the attention of the largest possible crowd in the hope it will encourage purchase, marketing to a niche audience can be highly targeted and therefore more cost effective.

Higher Profit Margins
Niche businesses are often a high margin business. Customers don’t mind, or necessarily realise, they are paying a little extra because they are only able to get that service, from that company, or under its brand.

You are the Expert
When your business has a specific niche market, you are seen as the expert in your field, the ‘go-to’ for the right answers. It’s difficult to be an expert in everything, but when you specialise in a niche market, you can define your skills and expertise in one area, attracting those who need your specific services.

Disadvantages of marketing to a niche audience

Impact of New Competitors
It’s the global nature of business that when a company creates a new service or product, it’s only a matter of time before a competitor comes along. When marketing to a niche audience, the impact of a new competitor can have a much more dramatic effect than when the audience is bigger. Strong relationships and brand loyalty can help to provide some level of protection for businesses.

Limited growth
By its very definition, a niche market is defined and limited, which will affect the opportunities for growth for your business.

Importance of marketing
Financial Consultants, The Balance, have highlighted the importance of marketing for small businesses. “Marketing is perhaps more important for niche businesses than for any other kind, because the niche market business is unknown and succeeds or fails on making the connection with exactly the right kind of customer/client.”

Whether your business serves only your niche, or a niche among other audiences, the purpose of niche marketing is the same.

You want to find a small pond in which you can be a big fish. If you compete for everything, you’re going to win at nothing. However, if you pick one area to concentrate on, you can focus your efforts and stand out in your market.


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