The Advantages and Disadvantages of Marketing to a Niche Audience

What is Niche marketing?

Niche marketing is a highly targeted form of marketing. Using niche marketing, businesses promote their products or services to a specific and well-defined audience.

By utilising niche marketing, an organisation has less wastage because their messages can be very targeted, rather than taking a scattered approach where you attempt to reach a very broad audience, most of whom will not buy your product or service.

To engage in niche marketing, companies must first identify their niche.

What is a niche market?

Every business has a target audience, a group of customers who most benefit and accept the product or service you are offering. Within these target audiences are also smaller subgroups also known as niche audiences.

They share certain characteristics and have specific wants, needs, and preferences. These niche audiences are a rich source of marketing opportunities.

A niche market does not necessarily mean a small market but does involve specific target audiences with a specialised offering.

Define your market segments

When you set up your business to appeal to everyone, it ends up appealing to no one because you are a small fish in a big pond. No one is going to notice you with all the other noise out there. You’ll get lost in a sea of bigger more established businesses and experts.

However, marketing to a niche audience means you are competing within a narrowly defined market segment with a highly specialised offering, which means your business is now the ‘big fish in a small pond’.

For any business, holding the majority market share in a niche market is a great achievement. But on the flip side, for a business that wants to keep on growing, pushing beyond the niche market is a must.

Understand your market for successful niche marketing

Niche marketing works well when you understand the market. A thorough understanding of your market means you can identify the unique needs of your potential audience, provide new and compelling products, tailor your products in the right way, communicate efficiently with the target group and identify how you will position against your competitors.

Targeting a niche market is often where many small Australian businesses start, with a single product that is of a single benefit to a niche segment of the market. By focusing on a niche market segment, small businesses can focus their resources on this subset of the market.

Niche marketing can be recommended as a start out business-building strategy to most effectively utilise limited marketing budgets.

Rather than equate niche with “small,” think “refined.” As in targeting the needs, motivations and self-interests of a consumer group with such precision as to maximise the clarity of what would give you a competitive advantage in their eyes.

Benefits of niche marketing

In a keynote presentation to Brandworks University, consultancy firm Lindsay, Stone & Briggs defined the benefits of niche marketing.

When marketers get it right, what they offer the niche is so valued by them:

• The marketer can charge a premium, reaping higher margins.
• Can platform the brand to drive share of wallet.
• Can experience rapid growth that makes up for the narrowness of the target.

Advantages of marketing to a niche audience

When you get niche marketing right the advantages will give you a competitive edge with less competition, brand loyalty, lower marketing spend, higher profit margins, and you’ll be seen as an expert.

1) Less competition

One of the benefits of a niche market is having little or no competition. When you have a highly specific product or service, there will be fewer companies out there with the same offering. The more specific your product or service, the fewer companies there will be to compete against for customers, however, there will also be less customers looking for your product or service.

Reduced competition is only a benefit of niche marketing when there is a significant audience to compete for. Kristen McCormick, a US-based Marketing consultant notes, “If your competitors aren’t targeting a niche because they can’t meet their needs, then that’s great news for you. If they aren’t targeting that market because it’s not lucrative, then you may not be at an advantage.”

2) Brand loyalty is built through strong relationships

Niche marketing makes it possible for businesses to build their brand loyalty. When you are engaging with fewer people, you can focus on the quality of those engagements and on nurturing your relationships. And as you are building your products and services specifically around this customer’s needs, you are a true partner rather than a supplier.

3) Lower marketing spend with niche marketing

Marketing to a niche audience makes it easier for you to save on your marketing dollars. Instead of taking a shotgun approach to marketing, ie the more is better philosophy gaining the attention of the largest possible crowd in the hope it will encourage purchase, marketing to a niche audience can be highly targeted and therefore more cost-effective.

4) Higher profit margins

Niche businesses are often high-margin businesses. Customers don't mind, or necessarily realise, they are paying a little extra because they are only able to get that service from that company or under its brand.

5) You are the expert

When your business has a specific niche market, you are seen as the expert in your field, the ‘go-to’ for the right answers. It’s difficult to be an expert in everything, but when you specialise in a niche market, you can define your skills and expertise in one area, attracting those who need your specific services.

Disadvantages of marketing to a niche audience

If you undertake niche marketing well, there are very few disadvantages but you should be aware of some of the pitfalls which include the impact of new competitors and growth limitations.

1) Impact of new competitors

It’s the global nature of business that when a company creates a new service or product, it’s only a matter of time before a competitor comes along. When marketing to a niche audience, the impact of a new competitor can have a much more dramatic effect than when the audience is bigger. Strong relationships and brand loyalty can help to provide some level of protection for businesses. 

2) Limited growth

By its very definition, a niche market is defined and limited, which will affect the opportunities for growth for your business. However, growth can be found within your niche audience, or by defining new niche audiences for your existing product or service, or even a new one.

Niche marketing examples

Icon Visual Marketing has conceived and implemented many successful niche marketing campaigns for many of our clients. A recent successful niche marketing campaign was for specialist railway supplier Delkor Rail. Delkor Rail has a very niche B2B audience due to the highly technical nature of their railway track and rolling stock products, many of which are unique in the market place.

Niche marketing solution

With such unique and industry-changing products, brand awareness was the number one priority. A combined SEO and Content strategy was put in place by Icon to ensure Delkor Rail was top of search and of mind. As the program grew, the strategy also encompassed LinkedIn organic to drive authority in this field. Delkor Rail also participates in global conferences. 

Niche marketing campaign results

Off the back of projects in Australia and thanks to content being widely distributed about these successes, Delkor Rail began in-track trials with Heathrow Airport and has a global customer base that includes work in Canada, Spain, Mexico, UK and Russia. Their unique offering has become a critical part of the delivery of many projects locally as well including Sydney’s Metro and Sydney Harbour Bridge.

10 niche marketing examples

Every business will have their own niche markets, but here are 10 niche market examples to help get you started:

1. People focused on health & fitness
2. Travellers
3. Gamers
4. People interested in anti-aging treatments
5. Business owners in a particular industry
6. Residents of your suburb (or within a certain radius of your business)
7. Road cyclists
8. Tennis players
9. Car restoration enthusiasts
10. First home buyers
    

How can Icon Visual Marketing help with niche marketing?

At Icon Visual Marketing, our marketing experts can develop a marketing strategy to reach your niche audience. We simplify the complicated, amplify voices, measure results and help make the clients we partner with, understand, and make decisions backed by data.

Read more about the work we do for our clients, or call us on 1300 138 984 for a free  audit of your digital marketing programs.