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Niche Marketing: Advantages and Disadvantages for Your eCommerce Business

Rashi Sood

Content Writer @ Shiprocket

December 30, 2020

7 min read

Niche marketing attracts a specific segment of the audience by focusing on a particular product or service.

While most businesses try to get more and more customers to earn money, niche marketing is different. Some businesses opt for traditional marketing methods, while others rely entirely on digital marketing.

Niche Marketing

Marketing helps build brand awareness, drive leads, sales, traffic, and engage with the target audience. But for businesses that are specialized and rely on quality customers rather than quantity, the marketing needs are different. For these businesses, niche marketing is highly beneficial. In this article, we shall discuss at length what niche marketing is and its pros and cons.

What Is a Niche?

A niche is a target segment of the market perfect for retailers that serve a specialist or a specific audience. Niche businesses are highly profitable as they cater to a specific audience. However, they gain minimal exposure, as well.

Understanding niche is essential as it helps to identify the potential audience’s needs and helps the business owners generate new product ideas as per the customer’s requirements and specifications. This also helps in finding the right way of communicating with the target audience to increase engagement.

What Is a Niche Market?

Niche Marketing

A niche market is essentially a part of a larger market defined by its unique preferences, needs, and identification. The different needs and preferences make them stand apart from the larger market segment.

For example, within the market for girls’ tops are many niches. Tops for teenage girls are different, which is further segmented into tops for school and college-going girls. As said, all these niches come under a larger market for girl’s tops.

Nearly all markets can be further divided into different segments based on particular needs and preferences. The most common and easiest ways to refine the niche market is by:

  • Geographics: resident of a specific neighbourhood, city, or even country
  • Demographics: age, gender, education, or income level
  • Psychographics: attitudes, values, interests
  • Level of quality: economic, handmade, premium
  • Price: discounted, moderate, luxury

It is a strategic business decision to serve customers belonging to a separate segment rather than serving a broader market.

Niche Market VS Mass Market

A mass-market strategy focuses on a wider audience pool while a niche-market strategy focuses on a smaller segment. On the one hand, mass marketing targets everyone with the hope of catching the right audience. On the other hand, niche marketing targets the audience whose interests align with products or services.

Mass marketing is a good option for a company selling footwear, whereas a company selling sports footwear will only serve people who love sports merchandise. In a nutshell, mass marketing targets all people, while niche marketing targets a part of the masses. A niche audience is narrowed down from a mass audience based on demographics, psychology, geography, or even prices.

Advantages of Niche Marketing

Niche Marketing

The advantages of niche marketing are as follows:

Less Competition

One of the main benefits of a niche market is no or little competition. When you serve a limited or specific audience, there are significantly fewer competitors providing the same offering. However, there would also be fewer consumers looking for your offerings. So, it becomes imperative that you target the right customers.

In a nutshell, the reduced competition will only be beneficial for you if your audience is significant. If you don’t have any competition, it may mean that competitors cannot serve them. However, they may also be not offering any product because the market is not that lucrative. So, you need to make decisions wisely only after considering all the factors.

Brand Loyalty

Niche marketing helps businesses build brand loyalty. With a niche market, you engage with a smaller audience. So, you can focus on the quality of customer service and nurture your relationship with them. As you cater to the customers’ specific needs, you are not just acting like a supplier but more like a right partner.

Less Spends on Marketing

Niche marketing makes it easier for marketing and advertising. Thus, you can save substantially on marketing and advertising. Marketing for a niche market is generally highly targeted. So, it is cost-effective as well.

Higher Profit

Niche businesses often have high profit margins. Niche businesses are meeting the specialized needs of the customers. Besides, customers also don’t get the product or service anywhere else. So, they don’t mind paying extra for the service.

Expertise

When you manufacture a specialized product and serve a niche market, you tend to act as an expert in your field. You are the best option to get the right answers. It’s indeed challenging to be an expert in every field. But, you can provide expertise in your niche category. The skills and expertise in one area will help attract more customers to meet their specific needs.

Disadvantages of Niche Marketing

Niche Marketing

Niche marketing is very advantageous. It has only a few downsides:

Limited Growth

As you find an opportunity in a specific niche, so will others. This can affect the opportunities that a business requires to grow. Depending on the specific business niche, reaching target customers or audiences can be very limited. This affects business growth.

High Competition

As you found an opportunity in a specific niche, so will others. While not a lot of competitors exist for a specific niche, the competition can become very ruthless. This competition can adversely affect those who are inexperienced or lack the skills to market their business successfully.

If possible, you can also speak to an expert to understand the niche and the target market. It’s good to be cautious!

New Competitors

It’s just a matter of time before new competitors come along when a new niche is created. The impact of marketing can have a more significant impact on a niche audience. Thus, a new competitor may have a bigger impact on a niche audience than a bigger audience. Brand loyalty and a healthy relationship can be very advantageous here to protect businesses.

Marketing

Undeniably, marketing is very important for all businesses. Marketing is imperative for niche businesses, as it is unknown. The business may fail or succeed in making relations with target customers. Thus, marketing is critical.

Higher ROI Not Guaranteed

As opposed to what is discussed above, serving a smaller target market can sometimes make it harder to earn good profits. Serving a niche means fewer customers, which can be quite risky.

Less Growth Opportunity

It can be hard to grow and improve without any competition. If you are the only business serving a niche, how will you improve yourself without competition and other brands pushing you to improve?

A satisfied customer is the biggest asset for any business. They will become your regular customers and also refer your business to others. Furthermore, positive word of mouth can be advantageous for a niche business. There may be fewer competitors in a niche market, but they all target the same customers. Thus, it becomes challenging but imperative to stand yourself apart from the competitors.

Conclusion

Niche marketing offers a unique approach to eCommerce that has its advantages and disadvantages. Niche businesses, by catering to a specialised audience, can tap into a host of benefits. These include operating with less competition, fostering strong brand loyalty, higher profit margins, etc.

However, as with almost every business approach, it has some inherent drawbacks as well. Niche businesses may find themselves limited in terms of growth opportunities due to the inherently restricted nature of their target audience. Marketing remains pivotal for niche businesses to connect with their audience, but it can be challenging given the limited market size.

Ultimately, the success of a niche business hinges on its ability to create value for its specialised audience and to differentiate itself from competitors. By carefully considering the advantages and disadvantages, you can determine whether niche marketing is the right path for you.

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