Targeting strategies should be appropriate to fulfill marketing objectives of the business. The three broad targeting strategies that businesses usually employ are Mass Marketing, Niche Marketing and Differentiated Marketing.
What is Niche Marketing targeting strategy?
Niche Marketing is the opposite to Mass Marketing.
This targeting strategy includes exploiting one small market segment. Niche Marketing needs to be very customer-focused to fulfill the specific need, if it is to be successful. The company must know its customers’ needs and wants very well.
This narrowly-used marketing strategy focuses on the product and follows the concept of product orientation.
Niche Marketing targets a very small and well-defined section of the whole market that has not been filled by competitors’ products yet. First, marketing managers need to identify the needs and wants of this very small part of the whole market. Then, the firm will concentrate all marketing efforts on developing highly specialized products to satisfy those peculiar needs and wants.
A business employing niche marketing targeting strategy sells goods and provides services of high quality and high price as sales volumes are smaller. The firm will concentrate on one market segment only developing strong branding that matches high-status products.
Examples of Niche Marketing strategy
Example 1: High-end luxury goods such as Louis Vuitton handbags for, Rolls-Royce cards and Rolex wristwatches. Coutts only offers banking services to the very wealthy.
Example 2: Exclusive sports such as golfing, scuba diving and horse riding, and extreme sports such as bungee jumping and parachuting.
Example 3: Supplying stylish men’s clothing such as hand-made suits and tailored shirts. Also, used for made-to-order expensive wedding dresses.
Example 4: Focusing on one selected market segment such as Abercrombie & Fitch aiming only at the youth market and Nike shoes aiming only for sports leisure.
Advantages of Niche Marketing
The advantages of Niche Marketing are viewed as the disadvantages of Mass Marketing.
1. The product will meet the exact need of demanding customer. Niche Marketing offers the business better focus because a very specific market segment is being targeted. The firm is not targeting the average customer as it is in Mass Marketing, but consumers are well-defined.
2. Specialized product should encourage customer loyalty. Businesses are highly specialized in meeting the needs and wants of their specific target market. Thanks to specialization, they are able to deliver exceptional product quality and customer service. This allows them to maintain strong customer loyalty, thrive and earn decent profits.
3. High profit margins. In the markets which have remained unexploited by competitors, the firms using Niche Marketing can sell its products at high prices, hence earn high profit margins. Customers will be willing to pay higher prices for getting unique and exclusive products to boost their social status. Also, if there are no competitors, the firm does not need to waste resources to respond to competitor actions.
Disadvantages of Niche Marketing
The disadvantages of Niche Marketing are viewed as the advantages of Mass Marketing.
1. Small number of customers. Niche markets are usually very small with limited number of current customers and potential customers. This is especially a big problem for a small company selling one product to one market segment. Due to limited number of customers, any changes in consumer spending patterns or a loss of one or two customers will have a tremendous impact on the firm’s entire operations.
2. Few opportunities for economies of scale. Businesses operating in niche markets have limited or none chances of exploiting opportunities resulting from economies of scale. Therefore, the average cost of production for those firms will be higher than for companies selling to mass markets using Mass Marketing targeting strategy.
3. Risk of competition. As profit margins are high and very high in niche markers, these segments may attract new entrants. The increased competition resulting from the opportunity to earn higher profit margins will pose threats to businesses operating in small market segments. This will reduce prices and potentially future profits.
Marketing strategies are necessary for the firm to achieve marketing objectives. Marketing managers will be looking at appropriate market segmentation, targeting and positioning of the firm and its products.
