Niche marketing is a key component of many small businesses.

If you live on business news sites or are an audio-book addict like me (I’ve got a serious Audible addiction), you’ve probably heard people talk about how important it is for small businesses to create their own niche market. In fact, when businesses reach out to us for website consulting, we often look into their niche market.

But “create your own niche market” is just as vague as the proper way to pronounce niche – nitch? neesh? That’s why in this article, we go beyond the niche marketing definition and provide useful examples and tips for creating a niche marketing strategy.

niche market pulled out of a fortune cookie


What is a niche market?

You’ve heard the term “think big.” Well, here we’re talking about thinking small. A niche market is a balance between being a small, targetable market and being a big enough market to be profitable.

Like all marketing, niche marketing needs to have fine-tuned product features aimed at meeting specific market needs, with price, quality of production and demographics factored in. A good example of a niche marketing strategy is a business narrowing its service offerings to target a small but profitable subsection of a market.

An example of a large market would be pet owners. If you sell dog food, what are the odds a cat owner will buy your dog food? Not good. That’s why you’d be focusing on dog owners.

But what if you’re selling shirts for toy poodles that say “my momma loves me?” Here, we’re talking about female dog owners; that’s an example of a niche market.

To summarize, niche marketing is like honing in on a small group of customers that are really interested in the product you’re offering instead of targeting everyone in the market. This also makes it more cost-effective to advertise since you’re not paying to get uninterested people to view your ads.

Dart hitting the center of its target symbolizing a target market


Wait, but isn’t that just a target market?

Well, yes, you could say that. It’s important to note that there’s a difference between a target market and a niche market. While a target market refers to that small group of people you want as customers, a niche market puts more emphasis on the services being offered.

For instance, content developers can have blog owners as part of their target market, offering them writing services. In that case, the writing services offered specifically to blog owners qualify as a niche market.

word of mouth marketing woman shouting


Reasons for Focusing on a Niche Market

More often than not – per the very often proven 80/20 rule – 20% of your customers are usually your most profitable customers.

So, instead of having everybody as a potential customer, niche marketing allows a savvy marketer to focus on a small group of potential customers so a business can mold services to meet those customers’ specific wants and needs. This detailed level of product market fit allows your service to be viewed as the best one for potential customers’ needs.

It’s also easier to identify that group when you already have a niche market. Who are you doing business with? What services are popular? Why? There you have it; you’ve got your target market and service offerings to develop a niche.

Now, build up your customer base in that niche. This will help increase the return on your investment in marketing, advertising and – most importantly – time.

If you’re a blogger, it’s almost necessary that you develop a niche market.

It’s easier to come off as an expert in your field when you’re writing to a niche market. Just understanding who your audience is and what you offer them makes it easier to be seen as a “thought leader.”

For example, instead of being a well-rounded psychotherapist, why don’t you specialize in relationship issues, build it into a brand and be known as “the love doctor.” That’s much more engaging than just being “Phil the Psychotherapist,” which is a little too close to Phil the Psycho.

Get over not having your 15 minutes of fame; don’t worry about being obscure to the masses. There’s a small group that completely believes in you and won’t have second thoughts taking your word for whatever niche you focus on. That’s exactly what niche marketing does for you.

Word-of-mouth marketing gone wild.

It’s easier to get quality referrals when you have a niche, mainly because a niche market lets you build trust and credibility as you work on gaining awareness for your products and services. The end result is that you come off as the best in your field.

Niche marketing reduces competition.

Keep your services more specific, and you cut out competition almost completely. Ever heard of the Blue Ocean strategy? Check it out; it talks exclusively about this concept.

Specialization makes you unique; you won’t have price quote shootouts with your competitors. When you’re the expert in a small but profitable market, it makes it more difficult for competitors to – quite simply – compete. Your competitors will have a hard time duplicating your strategies unless they’re willing to re-brand or launch a new brand, which may be a little late as you’d have already established a footing.

Creating a niche makes marketing much easier.

Niche marketing makes it easier for you to market, position and brand your products to the right people. Most niche marketing groups are made up of people with similar interest and behaviors, which increases the rate at which existing customers refer new customers. You don’t need the lavish advertising budget of McDonald’s, as you already have your small group of engaged customers to refer other people to you.

Your aim should be to develop a great product and keep each of your customers coming back for more. Make each and every customer count – instead of thinking of them as a vague blob – and give them more reasons to keep coming back.

Competition between a large competitor and a smaller one


Disadvantages of Niche Marketing

Were you sitting on the edge of your seat? Maybe you’re not even sitting down? If not, then I advise taking a seat because the following is going to be a bit rough. Unfortunately, there are some disadvantages to niche marketing, too.

Niche markets may get invaded by large companies.

Sometimes small, profitable markets grow to the point that they wake up the sleeping giant (looking at you Starbucks). In that case, a large company can invade a niche market, throw its weight around and disrupt a small profitable niche. This is even more likely to happen if the business you’re in has room to be conducted in large scale.

Here’s a good example: I wanted to start a cold brew coffee company years ago. My friend and I started roasting coffee beans and knew cold brew was taking off, but few people offered it and it wasn’t available in bottles. After having some hesitation we decided not to launch it.

Several months later, there were a couple local players in the cold brew game, but nothing too big. A few months after that, grocery stores started carrying cold brew bottled-to-go. A couple more months later and Starbucks started offering it in their shops. We would likely have been absolutely wailed on.

There’s a low chance of surviving if the business fails.

Relying on a small niche market of individuals as your sole source of revenue reduces your chances of survival in case things fail to work out.

Limited products and service offerings – though very well matched with a market – don’t matter when the market fails to respond well or a bigger player is more successful.

Niche Marketing Examples

Below are five examples of niche marketing:


No group understands the idea of niche marketing better than bloggers. What happens is that a particular blogger identifies a narrow topic that has a very specific audience and chooses to target that audience instead of targeting everyone. For example, a blogger that writes about running shoes instead of fashion.


There are a number of retailers who operate as niche marketers. Instead of selling a wide range of merchandise, they’d simply pick one single product to specialize in it. This works even better if the product they’re selling can’t be found elsewhere, including supermarkets and department stores.

Some modern schools

Some modern schools fall under the category of niche marketers pretty well. A case in point is the Montessori school system, which specializes in natural learning, nothing else. Though this type of school appeals to only a small fraction of the population, they’re the only alternative for parents who don’t want to enroll their children into the structured, conventional type of schools.

Specialty of Goods

Manufacturers with specialty goods are another great example of niche marketers. This could be household items, ornaments, student uniforms and so forth. As long as the goods manufactured fall within a certain line, the underlying company qualifies to be in this category.

Business consultants

Business consultants are now taking a more specialized approach with their business ideas. Instead of targeting the entire world of business, each of the companies identifies an area that they’re best suited in, and then proceed to give business advice in only that particular segment.

Man using a magnifying glass, symbolizing looking for a niche market


How to identify your niche market

Your quest to identify a successful niche market can only be successful if it’s driven with passion; you need to be really passionate about what you do, and then find people who inspire you to work.

These are the people who get you excited; the people who treat you with the utmost respect and give you more reasons to keep going. Find that, and you’ve found your target market. What’s remaining is for you to identify their wants and needs and what’s going unfulfilled. What product or service would they love to use that’s not being offered in the market?

Four questions to ask yourself if you’re trying to identify a niche market or sweet spot – as some people call it.

1. What are your values?

What’s the driving force behind the idea? What exactly do you want to achieve and where do you want to see yourself in the next 20 years? Answer these simple questions, and you’ll have dug out your business’s values, which run the range from quality, creativity, sustainability and creating partnerships.

You should also be able to state your core beliefs or the driving force behind the idea. Be specific with answers you give as they’ll help you pick a niche market.

2. What do you feel passionate about?

Is there anything in the world that you feel should be completely changed? What one obsession do you have in life? Again, be specific with your answers.

If you can figure anything out, ask the people close to you to tell you that one thing that they think. That will give you an idea of what to specialize in if you want to create a niche market.

3. What are your strengths?

Start by listing some of the things you think make up your strengths. This could be that special talent you have, that skill or anything else that you’re convinced sets you apart from the others. Use that to create your niche.

4. Who’s willing to pay for what you offer?

This one’s pretty important. Who is going to give you money for your product or service? You need to get really detailed on this one, stating their gender, industry, age, knowing where they live, their hobbies and so forth.

You can even pull a Sigmund Freud and analyze their fears, their aspirations, needs and what they dream about. Do you have anything to fix the problems or help them reach their goals?

Chalkboard showing development of a winning strategy


Niche Marketing Strategies to Employ

Focus on meeting your customer’s unique needs.

Start by asking yourself “what’s unique and compelling about my idea?” This will help you identify the unique needs of your potential market base as you work to make your business the solution they’ve been looking for.

Speak the same language as your customers.

You should be prepared to blend in, speak the same language as your target audience, or translate your brand values and benefits into something that everyone in your niche marketing group understands.

Test the market.

It’s important that you test your market before throwing in any huge investment. Use online advertising like Google Adwords and Facebook ads to test landing pages and product offerings for a very fine-tuned demographic. And get feedback in the early stages from those customers and potential customers in order to develop a product that offers a true benefit to them.

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