Niche marketing

Niche (pronounced neesh or nitch) is a word used in ecology and marketing. In its original use it is a noun that describes a shallow recess, especially in a wall, to display an ornament. It came into English from the French verb nicher to make a nest.

In ecology niche theory describes how an organism or group of organisms is always competing with others for the resources they need to survive. A strategy to reduce competition is to find a niche that other organisms aren’t using or not using very well.

It is exactly the same in business. Your business is competing hard for customers and you have to work very hard to keep them or they will go elsewhere. One way to decrease competition is to use a niche marketing strategy, which concentrates efforts on a narrow group (segment) of customers. First you identify the customer needs, or wants, that are not being satisfied by existing businesses and then develop specialist goods or services that satisfy them.

A very quick way of estimating whether your business can develop a niche marketing strategy is to look at your most loyal customers. First, work out if your best customers are price sensitive.  If your best  customers are not sensitive to price it means you can create a specialist product or service that might cost more but will be highly desirable. Second, work out if they share particular characteristics. If your best customers have lots of thing in common it means you can target your sales and marketing to those people and therefore produce a higher return on your marketing budget.

There was a useful prediction from 1989 (Laurel Cutler, quoted in Phillip Kotler 1997 Marketing Management p251):

There will be no market for products that everybody likes a little, only for products that somebody likes a lot.