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Advantages and Disadvantages of Niche Marketing

June 16, 2020
Sophie Logan
written by Sophie Logan
PPC Manager

Niche marketing focuses on a particular kind of product or service and attracts a specific audience. We looked at the pros and cons of this style of marketing.

While all business owners are trying to get more customers and make more money, the ways to do that can vary. Some still rely on traditional marketing methods, while others are starting to shift towards digital marketing.

Marketing is all about building brand awareness, driving traffic, leads, sales, and engaging with your target audience. But what if your brand is highly specialised and relies more on the quality of the customer rather than the quantity? The kind of marketing you’d need for this kind of business is known as niche marketing and in this article, I’ll take a look how you can use it to grow your business.

What is niche marketing?

To see if niche marketing has a place in your business, you need to first understand that a niche market is a specific area of a market.

Niche marketing is a marketing method that targets unique market or “niche” market. As I said earlier, it’s all about honing in on specialised group of people rather than having a broader advertising strategy.

Niche marketing can also help with:

  • Defining product features
  • Showcasing production qualities
  • Improve customer relationships
  • Fine-tune demographic data

In order to do niche marketing well, you need to be able to understand the current market. That means you need to find out what your audience wants, tailor your products or services to them, and communicate with users.

The difference between and niche and mass markets

A mass marketing strategy focuses on the largest audience possible through broad advertising. For example, this could be a TV advert or a national billboard campaign. Mass marketing tries to target everyone in the hope that the net is cast wide enough to catch the right audience.

Niche marketing is about focusing on a smaller group with interests that align perfectly with a business’s products or services. Compared to mass marketing, you’re not casting your net as wide, but you’re specific with who you want to catch. They can both work, but it depends massively on your business and your market.

If you were selling sportswear, you might consider mass marketing as the sportswear industry is worth around $62 billion in the US alone (as of 2019). But for something more specialised, like vegan women’s sportswear from Unicorn Goods, the niche approach would be more beneficial, especially as the production costs would be higher.

Example of niche markets

There are countless examples of what a niche market could look like and you can create your own using your own demographic data.

Below is a list of 7 but you can find more on this Shopify article on niche markets.

  • Vegans
  • Over 60s
  • Graduates
  • Gamers
  • Single parents
  • Remote workers
  • Self-employed

There will, of course, be overlaps but that can be an advantage as growth within niche marketing is dependent on how much you want to expand out of your direct niche. Adding an extra demographic could narrow down and, paradoxically, open your horizons.

Read: How To Use Microsoft Ads Demographic Targeting

Busy London train station
What niche demographics would this group of people come under?

Advantages of niche marketing

Higher ROI

Because niche marketing focuses on specific groups of users, they’re more likely to buy your product than someone caught in a mass marketing net. Having lower traffic than a broader site might seem counterintuitive but, say Site A gets 10 purchases from 100 visits and Site B gets 10 purchases from 1000 visits, Site A has a 10% conversion rate while Site B has 1%. It’s quality over quantity and that’s how you keep your ROI (return on investment) high.

Niche marketing also makes it much easier to save money when it comes to marketing as larger mass marketing strategies tend to cost more the wider your span and if you’re aiming to get on TV or on a billboard.

Better customer loyalty

Customer loyalty is a defining feature of niche marketing. When you approach marketing in this way, you are showing customers the things that they want or need. If they visit, they already have the intent to buy compared to a casual browser. It can also give you an edge over competitors because when a product or service is niche, it stands out a lot more with unique features.

Less competition

Unlike mass marketing, niche marketing has a lot less competition. To reference the earlier example, not everyone makes vegan women’s sportswear for a number of reasons, so if can, you’ve beaten out any potential competition before you’ve started.

Generalised marketing campaigns don’t always stand out either. Unless you’re a larger, recognisable brand like Apple, you could get lost in a sea of other campaigns with better reaches.

Disadvantages of niche marketing

Smaller market = limited growth

When you’re going niche, there is a much smaller market and target audience. Because of having a much smaller market size, it can be harder to get started, and can mean that growth could be slower. If you’re looking to grow very quickly, then this could be a disadvantage to you as there can be limited growth.

A higher ROI isn’t guaranteed

Having a smaller target market can also make it harder to have a larger profit margin or market share. Going niche can mean that there are potentially fewer numbers of customers, which could be a risk to the business.

Less competitors = lost opportunity to improve

It can be hard to compare to competitors as well, if they are using mass marketing, and you are choosing niche marketing. It’s even harder if they’re not there at all. If you’re the only brand making a certain type of product, how will you know how to improve without another brand pushing you?

Channels that can help niche marketing

If you want to implement niche marketing in your next marketing campaign, then you need to know the channels that are going to help.

SEO

SEO (search engine optimisation) is one that can make a real difference. It is all about being found through a search engine search. The people that find you from that and have found you for the right thing, will stick around; the rest will not. So think about the keywords that you use for your website, as that can make a difference to the types of consumers that find you online.

PPC

Niche marketing can also use PPC (pay per click) to create an element of demand. While there might not be any conscious demand for your products or services, you can use PPC as a strategy to pre-sell, to be able to generate some brand awareness and interest.

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Social media

Social media is another tool to help with niche marketing. You can be quite specific with any ads that you run, such as targeting certain locations, genders, or ages. You can also use analytics on your own channels, to find out about the people who follow you. Are they mainly of a particular age group, for example?

These elements can come together as you plan your strategy, which can include paid and organic social media, as you’ll know how best to aim your campaigns.

Email marketing

As part of social media and your website, you should also look to make the most of email marketing. That can be a good way to know who is interested in what you do, and then analyse the kinds of content that they have interest in, when you send out emails.

Email marketing also works well with PPC as we covered in a recent article.

Is it possible to be too niche?

This can all depend on the research that you have done. Keyword research is a good way to find out how often particular keywords or phrases are searched for online and whether there are any seasonal trends.

It’s important to estimate a value of clicks and impressions, both from a PPC and SEO perspective. If there are hardly any people searching for your target keywords, and the attached value is low, then it could be too niche.

The important thing to remember is your definition of niche works for you and your business. Industry benchmarks help with general estimations but what you do isn’t what your competitors do.

Conclusion

When it comes to the most effective marketing method for your business, there isn’t a definitive choice between niche marketing or mass marketing. However, with research, planning, and the right tools, you can find that niche marketing could work well for your business; there are plenty of advantages for doing so.

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