Marketing Niche Strategy

A niche market is a group of potential customers who share characteristics that

make them receptive to a particular product or service. marketing niche strategy looks at this characteristic which maybe no more complicated than a very simple need: for example refrigerator magnets, ties or wedding cakes. Therefore marketing niche strategy is to convert a potential segment of the market into a niche.

Launching a product into a niche market is far cheaper than launching a mass-market product. Potential customers are easier to identify and to target. Niche markets often develop as a subset of mass markets (the market for invalid cars and left handed oven gloves), and mass marketed manufacturers choose to launch niche products as well. Chrysler for example manufacturers the Dodge Viper, a niche vehicle that sells in extremely limited quantities to hardcore motor enthusiasts. Ford produces the Austin Martin, and Fiat the Ferrari.

 Conversely, what are expected to be the niche markets sometimes develop into mass markets. When Apple cam up with the PC in the early 1980s, it did not expect it to become a mass market product. Out of the mass market for PC’s there ultimately emerged a number of niches such as educational PC’s.

 The trouble with niche markets that do not turn into mass markets is that they soon reach their limit. A nice, which can be so helpful in getting the product off the ground, can soon become a straight jacket.  Manufacturer has to find another niche product or another market in which to sell their existing product.

The Internet has features that make it ideal for niche marketing. Through its mailing lists and newsgroups it gathers electronically in one place precisely those groups of customers with similar interests that are a niche markers dream. Mailing list and newsgroups focus on specific topics. In each discussion group there can be as many as 10,000 regular readers with special interest in that topic. And there are discussion groups of coin/stamp collecting, racing, cycling etc almost anything under the sun.

Theoretical aspect of the niche market

According to competitive advantage theory there are three main types of business strategies they are: cost leadership, differentiation and focus strategies. Of these three main types of strategy what concerns small business most is the focus strategy. Marketing niche strategy is a special type of focus strategy.

 There are two types of focus strategies cost focus and differentiation focus. It is most advisable to the small business owner to concentrate on a differentiation focus strategy, since a cost focus strategy might be difficult to maintain without achieving very large volume of production. On what type of differentiation focus can the small business achieve marketing niche strategy?

 The following are a few examples:

1. Marketing niche strategy based on customer needs and wants are the most sustainable – this usually arises when the mass-market product does not produce the item required. For example some products may not be customized to the individuals particular needs.
2. Marketing niche strategy can also be created if there are social and cultural differences within a single community that may require that changes may be required to be made to a product or service. This regularly gives rise to a niche market.
3. Marketing niche strategy is also created through exclusive rights – such as brands, trademarks, patents etc For example under the main brand a niche brand can be created to serve special customer needs e.g. milk high in calcium, certain type of collectors items.
4. Marketing niche strategy is also achieved through adopting particular delivery channels.

 How to develop marketing niche strategy sustain niche competitive advantage?

1. Select a segment of the market that has a special need.
2. Carry out market research to identify if the market size makes the idea feasible.
3. Ensure that exclusivity through branding, patents or trademarks can be obtained.
4. Prepare inventory and delivery channels.
5. Prepare a promotion plan to reach the particular market.
6. Implement the plan.
7. Monitor market continuously to ensure that ‘niche’ characteristics and market continue to be feasible.

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 e-book - Strike it niche!