MARKET NICHE: CHARACTERISTICS, SEARCH AND EXAMPLES - ECONOMY - 2024

Market niche is the term used to refer to a small market segment in which individuals have homogeneous characteristics and needs, and which is suitable to be served in a focused way by the seller of a product.

It is based on recognizing in a segmentation a new business opportunity, which arises from unmet needs and which can be economically exploited by a company. It can also arise because there are not enough companies to meet those needs.

Source: pxhere.com

Market niches do not exist by themselves, but are established by identifying the wants or needs that competitors are not addressing, and then offering products that satisfy them. It is the subset of the market in which a specific product is channeled.

Products and suppliers

The market niche delimits the characteristics of the product designed to satisfy the specific requirements of the market, as well as the demographic to which it is intended, the quality of the production and the price range.

Not all products can be defined by their market niche, since it is highly specialized and seeks to survive from the competition of numerous super companies. Even established companies create products for different niches.

In practice, product providers and commercial companies are commonly referred to as niche market providers.

Providers with a small capital usually go for a niche market with reduced demographics as a way to increase their financial profit margin.

characteristics

Small group

The niche is made up of people, companies or organizations in a small number, compared to the market segment to which it belongs.

Specific or similar needs

In general, the niche is made up of very specific needs or wants, and it also has its degree of complexity. Therefore, this group is willing to pay an "extra" to purchase the product or service that meets their expectations.

Willingness to meet your needs

The niche has a "good propensity" to acquire a product or service that meets its expectations, and in the case of companies or organizations, they have the ability to make purchasing decisions.

There is economic capacity

Each component of the market niche has sufficient economic capacity that allows it to incur the necessary expenses to obtain the satisfaction of its need or desire.

In general, companies and companies are willing to pay an additional amount in order to achieve greater satisfaction.

Requires specialized operations

When there are needs or desires with specific and even complex characteristics, the market niche requires specialized suppliers capable of meeting your expectations.

Very few or no supplier companies

In those market niches where the particularities and complexity of the needs or desires of customers require high specialization, it is normal that there are no more than one or two supplier companies, and there may even be none.

Is large enough to generate profit

According to Professor Phillip Kotler, an ideal market niche is one that is large enough to be profitable.

How to find a niche

A common route to success for many small businesses is to find a niche and establish a dominant position in it.

Therefore, there will always be segments of the population whose need for a particular product or service is not satisfied. The following concepts are key to finding a market niche.

Offer something unique

Ideally, you want to be the only one selling what you are offering. The trick to creating a unique product or service is finding unmet needs.

For example, a business may be creating handmade medieval costumes. Large retailers and even specialty costume stores do not supply these types of clothing.

Processes can also be products. For example, someone once considered inkjet printer cartridges and came up with the idea and the process of refilling them.

Offer something marketable

All kinds of original products or services can be devised, but if no one wants what has been produced, it will be of little use. Also, even if you are targeting a niche market, there must be enough demand for the product to be able to make a profit.

To determine demand, you must assess the market and conduct a thorough investigation of it. If you want to know if there is a market for your product, the best way to find out is to reach your target market, go outside, and ask questions.

Choose an available niche

Niche markets tend to be small, and there is not room for too many suppliers. Before starting a business, you should research your competitors, the size of the market, and how much of that market might be available to a new company.

If you have no competitors and the demand seems high, then the business concept has potential.

Market

Marketing is perhaps more important for niche companies than for any other type of company, because consumer knowledge of the product is low.

Success will depend on connecting with exactly the right type of customers and making them realize that they need the product on offer.

For example, if a Starbucks opens, people will know what to expect and they will know if they need coffee. In that sense, advertising is less crucial.

On the contrary, if you open a business that offers naturopathic treatments for pets, people will be less knowledgeable and less sure if they need the product.

Difference between segment and niche

The two most common marketing strategies used to target markets are niches and segments.

These are defined by factors such as price, quality, location, demographics, and psychographics.

Size

Niches can be very small. A niche can be, for example, the best pizza in a small town.

Segments tend to be larger. One segment is economy cars or high-end cameras.

Unlike a segment's audience, which represents large numbers of people, a niche's audience is a smaller, more influential audience.

Marketing in a niche is much easier than attracting a market segment, since the components of a niche have much more in common in terms of needs, wants or preferences.

Avoid competition

Niche marketing is a strategy used by small businesses to avoid competing with market leaders.

If you are a small store, you do not want to compete directly with the large retailers, as they have purchasing power and capabilities that make them difficult for a small company to beat.

A small retailer might choose a niche like high-end wines or hockey equipment to avoid direct competition with large competitors.

Participate in the competition

Market segmentation is a strategy implemented by large companies to seek new sources of growth. A market leader could use segmentation to find new customers.

In many cases, a large company uses segments to participate in the competition. For example, two large food companies could be competing to lead the market. When one develops a new segment (eg organic food), the other follows.

Large companies can also develop segments as a defense against niche competition. For example, if a large retailer in Canada finds that specialty competitors are succeeding in the hockey equipment market, they may develop a hockey segment to compete.

Examples of market niche

Food industry

The high demand for artisan foods is generating many businesses to fill the niche, from specialty chocolates to cheeses, cold cuts, jams and jellies, to roasted coffee.

Gluten-free product sales increased 34% year-over-year from 2010 to 2015, and total sales are expected to reach $ 2.34 billion in the US by 2019. Specialty gluten-free cafes and bakeries are popping up in everywhere.

The sale of organic produce continues to grow as consumers become more concerned about the hormones and pesticides used in growing conventional food products.

Specialty food cars are becoming increasingly popular with consumers who want more than just traditional fast food, like hamburgers, fries, and hot dogs.

Craft beer making is a very popular niche market in North America, as beer connoisseurs increasingly prefer great tasting craft beer.

People of the Third Age

75 million Americans who were born between the years 1946 and 1964 are now retiring or going into retirement. According to an investigation by the American Association of Retired People, almost 90% of them want to continue living at home.

This has opened up many opportunities for small businesses catering to this niche market:

- Transportation and delivery services for those who cannot drive or are homebound.

- Home care services such as cleaning, meal preparation, etc.

- Gardening and landscaping.

Pet care industry

Here's another very popular niche market: Americans spent $ 60.5 billion on their pets in 2015. The popularity of pets has opened up a variety of opportunities for small businesses, including:

- Pet care for owners who are absent.

- Walk and pet training.

- Cleaning (it can be a home service).

- Special pet foods, such as dog treats, raw foods, etc.

Technology

Hewlett-Packard has all-in-one machines for printing, scanning, and faxing for the home office niche, while at the same time having separate machines for each of these functions, for the large business niche.

References

1. Business Dictionary (2019). Market niche. Taken from: businessdictionary.com.
2. Business and Economics (2019). Market niche. Taken from: business-and-economics.com.
3. Wikipedia, the free encyclopedia (2019). Niche market. Taken from: en.wikipedia.org.
4. Susan Ward (2018). How to Find a Niche Market and Make It Your Own. The Balance Small Business. Taken from: thebalancesmb.com.
5. Susan Ward (2018). Niche Market Definition for Business. The Balance Small Business. Taken from: thebalancesmb.com.
6. Anna Mar (2013). Niche vs Segment: What's The Difference? Taken from: simplicable.com.