When you talk about the USA than you are referring to a country but when you talk about California city than you are being specific but when you talk about the particular street of California or a particular group of people of California than you are talking abbot niche as niche refers to something which is very specific. In the case of marketing also companies use this concept where they target a small group of consumers who have similar preferences or behavior or needs and companies market their products and services accordingly. In order to understand more about this concept one should look at various features of niche marketing –
Niche Marketing Features
Small Percentage of Total Market
The first and foremost feature of niche marketing is that the target market is very small percentage of total market, hence, for example, many people go to tourist places of Asia region or Europe region for holidaying but few people go to Africa region for holidaying and in case of marketing if the company is targeting the people going to Africa region than this is the case of niche marketing as only a small percentage of total people want to go to Africa region for holidaying.
High-Profit Margin
Another characteristic of niche marketing is that profit margin is quite high in such market because for simple reason that not many companies are interested in servicing the customers of that particular niche and companies providing service to the niche typically follows price skimming strategy where they charge higher price initially so as to skim the market before the competitors enter into the niche market as once competitors enter into market company cannot charge higher price for the product due to competition from competitors.
High Success Rate
Companies do not enter into niche segment overnight rather companies do proper market research and then they decide to enter into a niche market which is having good potential. Hence if the product of the company is according to the expectations of the consumers than the chances of the company succeeding in the niche market is very high. In simple words, the success rate in case of niche marketing is good as compared to other forms of marketing.
Less Competition
In the case of niche market initially, competition is very low and hence the company does not has to worry about competition rather it can concentrate on the quality of products as well providing the customer with good service. Hence in the above example, many overseas tour companies offer a package for famous tourist destinations of Asia and Europe region but when it comes to offbeat tours like a tour to Africa region than you will not many tour companies offering tour package for Africa region.
Low Volume Business
If the company is thinking of getting huge sales numbers from a niche market than it is wrong as in niche marketing companies do not earn profits by doing high volume business for fixed margin of profit rather they earn profit by fulfilling the unique demands of small group of people by charging premium pricing form the customers for the products offered by the company.
As one can see from the above characteristics of niche marketing that niche market requires different approach and strategy on the part of the company and any company thinking of entering into niche market space should carefully read above points and then decide whether their product, as well as marketing strategy, fits the niche market criteria or not.