Niche Marketing

 A niche is a more narrowly defined customer group seeking a distinctive mix of benefits or
values. 

Marketers usually identify niches by dividing a market segment into subsegments.  For example, while Hertz, Avis, Eurocar and others specialise in airport rental cars for business and leisure travellers, Enterprise has attacked the low-budget, insurance-replacement market by primarily renting to customers whose cars have been written off or stolen. By creating unique associations with low cost and convenience in an overlooked niche market, Enterprise has been highly profitable.

The objective of a niche competitor, such as The Body Shop, Porsche or Saab is to be a large fish in a small pool. The niche market customers have a distinct set of value requirements and they will pay a premium to the firm that provides the best market offering. 

Niche markets are generally fairly small in terms of volume but constitute a sufficiently attractive size, profit and growth potential. Also, they are less likely to attract many other powerful competitors and can
benefit from focusing their resources to gain economies through specialisation. 

Some larger companies, such as IBM, have lost parts of their business to successful niche competitors. This market competitor has been colourfully termed ‘guerrillas against gorillas’. The same thing is also
happening in the online social networking market, where MySpace is becoming a mature service provider.

 MySpace

 Social networking sites such as MySpace show many of the characteristics of fads. They quickly become popular but they can just as quickly fall out of favour. These pioneering sites initially enjoy a wide appeal and are crucially reliant on advertising revenue. A sudden drop in traffic numbers can threaten their survival.  As competition in current buyers’ markets intensifies social networking sites too will disaggregate. Many upstart social networking nichers hope to capitalise on the tendency of individuals to want to congregate with others who share their own particular passions and values. For instance, there is now 1Up.com, a contentheavy social site where online gaming fanatics can trade tips, stories, opinions and gossip 

Large companies are increasingly turning to niche marketing. The Anglo-Dutch company Unilever acquired the US premium ice cream maker, Ben & Jerry’s, as it was perceived to have a distinctive business style that appealed to customers. Both firms enjoyed a good reputation for operating ethical and socially responsible operations as well as providing quality products.

 As marketing efficiency increases, niches that were hitherto considered to be too small may become more profitable.6 The low cost of setting up shop on the Internet has led to many small business start-ups aimed at niches. The recipe for Internet niching success: choose a hard-to-find product that customers don’t need to see and touch. ‘Marketing insight: Chasing the long tail’ outlines how provocative are the implications of Internet niching.

Internet Niching
After initial losses Amazon has come of age as an Internet shopping centre. Faced by the longtail product life cycle curve that characterises many of today’s businesses it has restructured its business and is now making profits.

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