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Why Niche Marketing Is Perfect For Small Businesses?

Updated: Apr 6, 2018

As markets develop, competition drives up quality and convenience to the point that offerings become commodities. Only businesses that can differentiate themselves from the competition will stay relevant in today's economy.

In this article, we will cover the benefits, common mistakes and use examples to illustrate how niche marketing can help small businesses become profitable.

What is Niche Marketing?

Niche Marketing is all about satisfying the needs of customers from a specific demographic, psychographic and geographic group with products and services of a certain price, quality and features to meet their needs.

For example, cable channels like ESPN and NFL target a niche of sports enthusiasts.

Niche Marketing can be used by businesses of any size, but it is especially beneficial for small businesses with limited resources. Let's find out why.

Why Niche Marketing?

Niche Marketing is not a new concept, many global companies started off serving a niche market and disrupted their entire industry.

When companies like Starbucks, Apple and Walt Disney started serving a specific niche market, many believed that their target markets were too small to be profitable. But look at where they are now.

What were some of the benefits from serving a specific niche?

  1. First Mover Advantage is a great reason why you should target a niche market. Other small businesses are not aware of your niche and large businesses won't bother with these small consumer segments.

  2. Limited Resources is another reason why small businesses cannot afford to be all things to all people. The more well defined our target market, the better you can focus your manpower and marketing budget to extract more value from customers.

  3. Profitability tends to increase with a niche market. If no other suppliers or if you can better meet consumers' needs, they will be willing to pay more for your products.

  4. Higher Conversion Rates for businesses who fully understand the needs, wants, preferences of their target audience. Specialized products and customized marketing messages will help you achieve higher conversion rates and sales.

Common Mistakes of Niche Marketing

While many people think that Niche Marketing is all about targeting small markets, you need to size your market and ensure that your niche market is profitable.

For example, a store selling shaved ice in Antarctica may not generate enough business, but a store selling only fries in Belgium can differentiate itself from competitors.

Don't just target any small customer segment, find a niche market that is profitable.

Successful Niche Marketing Examples

Many businesses start by targeting niche markets then expand to new markets. These brands have successfully (and surprisingly) adopted niche marketing strategies.

1. Whole Foods Market

The US supermarket chain specializes in natural and organic foods for the health-conscious consumer. It started in 1980 with a small store in Texas and has since expanded to over 477 stores in US and UK.

2. Sankt Gallen Brewery

Fancy a craft beer made from elephant dung? The Japanese brewery has been crafting beers with weird flavors to cater to the tastes of beer aficionados. Their limited-edition, Un Kono Kuro beer, was made from coffee beans partially digested by elephants and sold at $100 per bottle!

3. Honor

As developed countries battle with the issue of aging population, businesses have emerged to provide a variety of senior care services. The Honor mobile app aims to connect in-home caregivers to seniors with physical and mental disabilities.

4. The Barkley Pet Hotel

The Barkley Pet Hotel is a one-of-a-kind luxury hotel for your pampered pooches. Amenities include flat-screen televisions, swimming pools, personal trainers and even a limousine pickup service!

5. LifeGem

LifeGem has revolutionize the funeral services business by transforming the ashes of your loved ones (pets included) into diamonds you can wear. Diamonds last forever right?

6. RentAFriend.com

Need a friend for your social events, a wedding or a party? Don't fret, RentAFriend.com allows you to hire someone for all your events or for some companionship.

7. Rent-A-Chicken

Have you ever dreamt of becoming a farmer? But you live in an urban metropolis? This company allows city dwellers to try out small scale farming by renting chickens.

8. Hangover Helpers

Do you love parties but hate to clean by the next day? An Australian company has the solution! Hangover Helpers provides party clean up services and it even comes with a breakfast!

9. Anger Room

Are you having a bad day at work? Then visit the Anger Room, let your hair down and smash some stuff!

10. I Do, Now I Don’t

When Joshua Opperman, tried to sell his engagement ring after his fiancée ran away, he only received a third of the purchase price. This life changing experience spurred him to create I Do, Now I Don't, an e-commerce site for second hand engagement rings.

11. NERD Fitness

NERD Fitness is helping nerds around the world lose weight and get back in shape.

The Future Of Niche Marketing

Niche Marketing is not a new concept. But more than ever, technology has enabled small businesses to use consumer data to identify niche audiences, target individuals with personalized marketing messages and customize products with small-batch manufacturing.

With the benefits of niche marketing, small businesses can target niche segments, be ultra-relevant and earn higher profits.

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