What are the cons of niche marketing
Niche strategy definition
The niche strategy is one of the possible competitive strategies (alongside the cost leadership and differentiation strategies).
The company does not cover the entire market with its products or services, but only a part of the market or a market niche. The niche can exist in a certain customer group, in special products or in a certain region.
Within the niche, you can then in turn apply the cost leadership strategy or the differentiation strategy.
Examples of niches or niche products
- Sports car market (instead of car market),
- Oversize clothing, work clothing or outdoor clothing (instead of the textile industry),
- Running shoes (instead of sporting goods or sports shoe manufacturers),
- Jump skis for ski jumpers (an extremely small niche).
The niche strategy has that advantagethat the company can specialize technically (e.g. running shoe development) and also position itself in a very targeted manner in marketing.
disadvantage are, however, that due to the lack of economies of scale, the costs of the niche provider are relatively high (often niche providers can compensate for this with high sales prices), the sales potential is limited and a niche can be risky if demand is declining or even disappearing altogether (if Jogging is out, almost nobody needs running shoes anymore - and the company that has relied on this niche often has no alternative and shares the fate of the product or trend).
Even niche providers can make billions in sales (sports cars, running shoes) and become valuable companies, but they will never be among the top-selling companies in the world.
An initially small niche may well become a relatively broad market over time, e.g. organic food or hybrid or (in the future) electric cars. But if, for example, all cars are electric, one can of course no longer speak of a niche.
Alternative terms: focus.
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