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‡ A corporate strategy which focuses on identifying

and satisfying a relatively small segment of market.
‡ Concentrating on small identifiable segment of
market, with the aim of achieving dominance of the
segment.
‡ Niche Marketing is tailoring a product to a
particular type of customer.
‡ A market segmentation strategy designed to fulfill
specific or unsatisfied need in tightly defined part of
the market.
‡ It is adapting the company¶s offering to more
closely match the needs of one more sub-
segments where there is often less competition
‡ This limits the sales potential but makes the
product more attractive to those in the target
market.
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 `

‡ A niche is small segment (or sub-segment) of
a larger market.
‡ It is normally a narrow defined market where
there are only few suppliers.
‡ Niche markets are often of interest to small or
medium size firms because of the modest
levels of profits.
‡ Examples
± Specialist publishing
± Unusual holiday destinations
± Soft top luxury sports car
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 ` 
‡ - specializes in meeting
all needs of one type of end user.
‡ - specializes in one
level of production-distribution cycle.
‡ 
 - specializes in
supplying one or two large firms.
‡
! - specializes in
particular geographical area.

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 `  "

‡ [#-

specializes in producing a particular
product with unique features.
‡ $%[- a niche in
terms of quality or price, operates either
at the top or bottom of the pyramid.
‡ - offers a service
which is unavailable elsewhere.

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Characteristics of Niche Markets
‡ Low volume of sales
‡ High unit cost
‡ High prices to compensate for high
costs
‡ Differentiated product
‡ Restricted distribution
‡ Targeted promoted
‡ But remember that all niche markets are
not profitable even if there is only one
player in the market.
·
Characteristics of Ideal Niche
‡ Large enough to be profitable
‡ Has demand growth potential
‡ Sufficiently differentiated
‡ Sufficiently small so as not to attract
large scale operators
‡ The company has competence and
resources to take advantages of the
opportunities offered.

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Niche Marketing Strategy works if«
‡ The Niche market is of sufficient size to be
profitable.
‡ The Niche has growth potential
‡ The Niche is of negligible interest to
competitors.
‡ Major firms do not compete in this segment.
‡ There is high degree of customer loyalty.


 Niche Marketing Strategy works if« cont.

‡ The firm has skills and resources to

serve the niche effectively.
‡ The firm can defend itself against an
attacking major competitor through the
customer goodwill it has build.
‡ There are barriers to the entry of rivals.
‡ The product is sufficiently differentiated
to allow a premium price to be charged.

A
 Advantages of Niche Marketing
‡ Less competition- a big fish in a small pond.
‡ Clear focus- target particular customers
‡ Builds up specialists skills and knowledge
appropriate for that niche.
‡ Requires fewer resources.
‡ Able to charge premium price for more
exclusive product.
‡ Provides a safe haven for small firms.
‡ Small firms can sell to those niche that has
been overlooked
‡ Return may be relatively high
X
Disadvantages of Niche Marketing
‡ Lack of economies of scale.
‡ Risk involved in over dependence in a
single product or single market
‡ Firms which successfully exploit a niche
will attract competition.
‡ Because niche market contain small
number of consumers they tend to be
faced by bigger and more frequent
swings in consumer spending than
larger markets.
‡ Vulnerable to market changes XX
Niche Marketing as a hope for small retailers

‡ The big supermarket chains (Tesco,

Sainsbury¶s, Asda and Morrisons) have
a combined market share of 74 percent
of the grocery market.
‡ Tesco alone has a market share of 30
percent.
‡ The major players are moving into
convenience store market.
‡ What hope is their for small independent
shops?
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` &! 

‡ å 'the popularity of organic

meat and home made specialist
sausages provides an niche market
opportunity for small butcher.
‡ å&-can survive by offering hand
made small bread and elaborate
pastries.

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