Advantages of Niche Marketing Strategy
There are numerous advantages of niche marketing strategy that you may want to consider before venturing into this kind of marketing. Niche marketing is simply concentrating marketing efforts on a specific, small, but well defined population segment. Although there are no existing needs, identifying wants, needs as well as requirements that have not been addressed properly or not addressed at all by the competing firms as well as coming up with services and goods for satisfying them creates niches. As a marketing strategy, this approach aims at being the fish within a small pond rather than being a fish within a big pond. Niche marketing is also known as micro-marketing.
What niche marketing strategy entails
Niche marketing entails competing in a narrowly defined segment of a larger market with certain, specialized offerings. Essentially, the company becomes a big fish in a smaller pond. The competitive advantage of the company comes from a large market share and its expertise. Consequently, most potential competitors do not consider it viable to compete with niche marketers directly. This strategy is rarely implemented by some companies and some people confuse niche marketing with one-on-one marketing. The strategy is not used by most small businesses because their share of the large segment is very small.
Advantages of this marketing strategy
Niche marketing is a highly specialized and cost-effective marketing strategy. It entails having a niche market, which is a small segment that is identified by dividing a large segment into several sub-segments.
Some of the major advantages of this marketing strategy include:
- No or little competition
With niche marketing strategy, a marketer can dominate the targeted market segment successfully to a level of owning it. Virtually, this strategy minimizes the threat of entrants and competition. Thus, niche marketing is different from generalized marketing where there is still competition. Competition is less for viable customers who want to purchase a product.
- Brand loyalty or strong relationships
Over time, most niche marketers establish strong relationships with their major customers. This further ensures their protection against competitive threats. Additionally, since niche marketing enable marketers to provide services and products that customers desire and need, it establishes brand loyalty.
A business that uses this marketing strategy establishes strong relations with customers. This equates to a stable business which does not face major fluctuations in terms of performance.
- Enhanced capabilities
Since niche marketers are specialists in their areas, they add more capabilities and skill sets. This gives them better competitive position while making it difficult for new players to challenge them.
- Focused business
Firms that engage in niche marketing do not spend time or efforts reviewing marketing strategies or looking for new opportunities. Instead, they are focused, committed and defined to their business. This enhances the success of their marketing efforts.
- Increased profits
Niche marketers tend to have higher profit margins since they most probably do not consider price as the determining factor. They use the services or purchase products of a company because they consider it as providing the most ideal solution.
- Cost reduction
Since niche marketers are able to visualize who they talk to, creating a list of targeted prospects becomes easy. They are also able to come up with marketing and sales messages that target their specific prospects. Thus, niche marketing is a marketing strategy that does not entails throwing money with hopes of getting returns. It enables marketers to reach more prospects that are likely to purchase their products or services.
Specialist advantages of niche marketing strategy
There are times when a marketing niche develops organically. For instance, a dentist can start with a generalized practice but eventually practice in a local school and finally specialize in treating small children from the local families. Over time, the dentist might specialize in serving kids only. After practicing for a while, the dentist will have more customers and increased profit margin as kids tell their friends about the services of that particular dentist.
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