Market niche

What is a market niche?
Types of market niches
Advantages and disadvantages of niche business
How to choose a market niche and start working in it

What is a market niche?

A market niche is a specialized sector of business where the consumer base is clearly defined, and their needs are specified. The main characteristics of a market niche include:

A narrow and clearly defined target audience;
The presence of specific customer requests;
Low competition or complete absence of it;
A small market capacity, which is associated with the uniqueness of the product and narrow demand.

An example of a market niche could be the sale of porcelain tableware with a family crest, which meets the specific needs of a narrow segment of clients.

It is important to distinguish between the concepts of "niche" and "segment" of the market: a niche is a limited area within a segment, while a segment encompasses a broader area within the industry.

Examples of segments and niches

Let's consider a few examples:

Industry: Children's products
- Segment: Clothing
  - Holiday costumes
  - Outfits for hospital discharge
  - School uniforms
Industry: Books
- Segment: Fiction
  - Detective stories
  - Science fiction
  - Classic poetry
Industry: Furniture
- Segment: Kitchen furniture
  - Kitchen sets
  - Tables
  - Stools

Types of market niches

Let's consider the main classifications of market niches based on various criteria:

By method of niching

Target marketing: Focused on narrow segments of the market that do not attract large companies. Example: startups offering unique products.
Special market situation: A unique demand for products is created under specific circumstances, for example, souvenirs during sports events.
Horizontal marketing: Focus on one segment of the target audience to meet as many of its needs as possible.
Vertical marketing: Targeting different segments of the target audience and integrating the product into various fields.
Cluster marketing: Creating a circle of regular customers by offering a bundle of goods or services.

By size

Niches can be classified by size:

Broad niches: Include a variety of categories of goods or services.
Narrow niches: Focused on one category of goods or one type of service.

Advantages and disadvantages of niche business

A niche business, specializing in a narrow segment and specific product, has its pros and cons:

Pros

Customer loyalty: Due to low competition, consumers often choose one seller for repeat purchases.
Reduced advertising costs: Word of mouth is often the main source of new customers.
Rapid growth: Niche businesses have the potential for quick increases in sales and profits.

Cons

Limited growth: Increasing the customer base can be challenging.
Risks of declining demand: Changes in consumer requests can negatively affect the business.
Likelihood of increased competition: New players may enter promising niches, complicating the situation for existing companies.

How to choose a market niche and start working in it

When choosing a market niche, a number of criteria and steps should be considered:

Selection criteria

Demand: Presence of demand for the product.
Growth potential: Possibility of expansion and increased profits.
Low competition: Absence of similar offers in the market.
Product uniqueness: Distinctions from competitors.
Expertise: Availability of knowledge and skills in the chosen field.
Resource capabilities: Sufficient resources for conducting business.
Personal interest: Passion for the chosen niche.

Launch process

The launch process includes the following steps:

Market and competition research;
Demand analysis and factors affecting the market;
Defining the target audience;
SWOT analysis to identify strengths and weaknesses;
Developing a business plan;
Testing the niche through limited advertising.

Common mistakes

Launching without necessary knowledge;
Ignoring customer needs;
Disregarding market research;
Need for testing ideas;
Choosing an uninteresting field.

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