Asokay SCORE: Professionals and cons of area of interest advertising | Enterprise Information

ANSWER: In a nutshell, a niche market is a particular segment of a larger industry group.

A major disadvantage is that it might be too small and, as such, can limit your growth potential.

It is, therefore, critical that you do your due diligence in the selection of the market segment you wish to pursue.

In my opinion, there are more pros than cons to niche marketing. They include:

• Advertising: Marketing to a niche allows you to directly target the customers you wish to reach, thereby saving dollars wasted on promotions to the broad market. As an example, placing an ad in a local or regional newspaper or a trade publication is much more beneficial and cost effective.
• Specialization: By focusing on your niche, you soon will become aware of the particular needs of your customers and how best to accommodate those needs.
• Brand recognition: Over time, you will become regarded as a credible expert in your field and the go-to person for your product or service.
• Bargaining power: Once you have grown to a size where you can deal in high volume, your suppliers will be more apt to allow volume discounts and favorable payment terms. As a market leader, you can ask for and demand the best for your customers.
• Limited competition: The ideal niche market is one that is under-served. With fewer providers, profit margins are generally higher. Profit is not a dirty word and you are entitled to a fair profit for the products or services you provide.
• Longstanding relationships: Because you provide for a critical need, it is not unusual for the business relationship to evolve into a personal friendship with the customer. It can be a deep and lasting bond that could never be realized in a mass market where the only consideration is price.