Niche MarketsNiche Markets

What is a niche market?What is a niche market?

Niche marketingNiche marketing is the process of is the process of finding and serving profitable market finding and serving profitable market segments and designing custom-segments and designing custom-made products or services for them. made products or services for them.

Niche marketers are often reliant on Niche marketers are often reliant on the loyalty business model to the loyalty business model to maintain a profitable volume of maintain a profitable volume of sales.sales.

Characteristics of a NICHECharacteristics of a NICHE

Low volume of salesLow volume of sales High unit costsHigh unit costs Therefore high pricesTherefore high prices (Highly) Differentiated products(Highly) Differentiated products Targeted promotionTargeted promotion

An ideal niche is…An ideal niche is…

Large enough to be profitableLarge enough to be profitable Sufficiently differentiatedSufficiently differentiated Small enough to avoid the attention of Small enough to avoid the attention of

the big boys.the big boys. We have the competence to take We have the competence to take

advantage of the opportunities offered.advantage of the opportunities offered. Can build up goodwill, to keep customersCan build up goodwill, to keep customers

AdvantagesAdvantages

Less direct competitionLess direct competition Clear focusClear focus Builds up specialist skills/knowledgeBuilds up specialist skills/knowledge Cheaper to set upCheaper to set up Able to charge premium pricesAble to charge premium prices Build up strong brand image/loyaltyBuild up strong brand image/loyalty

DisadvantagesDisadvantages

Lack of Economies of ScaleLack of Economies of Scale Dependent on a small marketDependent on a small market If successful, will attract competitionIf successful, will attract competition Small numbers make vulnerable to Small numbers make vulnerable to

changes in consumer spending (as changes in consumer spending (as does premium pricing)does premium pricing)

How to compete with UK How to compete with UK supermarkets?supermarkets?

4 companies account for 74% of 4 companies account for 74% of grocery shopping in the UKgrocery shopping in the UK

Tesco alone has 30%Tesco alone has 30% They are now moving into They are now moving into

convenience storesconvenience stores What hope is there for small What hope is there for small

independent shops?independent shops?

A niche hope!A niche hope!

E.g.E.g. Bakers can survive by offering high Bakers can survive by offering high

quality fresh bread, and specialty quality fresh bread, and specialty pastries.pastries.

Butchers by latching onto the Butchers by latching onto the popularity of organic meat, and popularity of organic meat, and home made sausage.home made sausage.

On-lineOn-line

The inter-web can bring hope too.The inter-web can bring hope too. It will make more and more niches It will make more and more niches

profitable!profitable! E.g. E.g. www.sax.co.ukwww.sax.co.uk focuses upon focuses upon

saxophones, and only saxophones.saxophones, and only saxophones.