There are a number of advantages and disadvantages of niche marketing. By definition, a niche market is a subset of a market on which a particular product is focused. Niche marketing defines product features, production qualities, demographics and price range to satisfy specific marketing needs.
It is a highly specialized market segment, which targets a niche of particular enthusiasts and aims to survive among the competition from numerous super companies. Niche marketing is a useful approach, which can help businesses to increase their financial gain margins.
Niche marketing is extremely cost-effective. For instance, if you are offering a product for a selected demographic, you could advertise the product using a local media so that marketing budget go a lot further, allowing you to use a more comprehensive media mix. Niche marketing works well when you understand the market.
Understanding the market means you are able to 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.
The Advantages and Disadvantages of Niche Marketing
Unlike in generalized marketing where market competition is still, niche marketing has quite less competition for the viable customers purchasing the products.
Niche marketing makes it possible for businesses to build their brand loyalty. This marketing approach lets you provide customers with products and services they need and desire. You end up having a leg up on the competition because items in a niche market are difficult to find in general products.
Best for giving marketing insight
Niche marketing is all about selling to a segmented market. It is about taking your products to people who have an interest in receiving them. This can help you redefine your business, leading it in a new product directions and services. You will end up creating new opportunities for your business by selling similar or support products. Once you begin to concentrate fully on niche marketing, you will learn about new products, innovations and ideas about the market.
Saving on your marketing dollars
This is a type of marketing where you will never throw away money hoping for returns. Niche marketing makes it easy for you to save on your marketing dollars. Generally, you do not have to send over ten thousand flyers to one or several neighborhood. Instead, send less than a thousand flyers to a target audience that meets the requirements for your niche. With this approach, you will be able to reach a larger percentage of people who are more likely to use your services or purchase your products.
Because of the smaller market size, this marketing approach is not suitable for a company that is small and intends to grow in the current market. The smaller market makes it difficult to enjoy a larger profit margin in the market.
Among the advantages and disadvantages of niche marketing is that there is limited growth because there is a small group of customers to buy products.