A niche company is a business that focuses on a particular type of product within a specific market segment. While many businesses start out as niche companies with narrowly defined specializations, only some remain niche companies as they grow. Others branch out and expand their offerings.
Marketing Advantages
One area where niche companies have natural advantages is the field of marketing. Niche marketing is the process of targeting a specific group of consumers. Niche companies focus on niche markets with the understanding that this excludes a large number of consumers. However, it's the consumers within the niche market who are most likely to buy the company's products or services. By segmenting markets and focusing on select demographics, niche companies can reduce their marketing budgets. For example, a niche company that only sells life insurance can advertise to retirees on daytime television when advertising rates are lower, while a general financial services company may need to buy more expensive ads during prime time to attract younger car insurance, college savings and mortgage customers.
