Developing Niched Markets
FastTrac, Kauffman Foundation
Although you may want to sell your product or service to the largest possible market, it isn't always the quickest path to growth and profitability. You will find difficulty marketing to a large number of potential customers. It takes greater resources of time, money, and people to sell to a larger audience than a smaller one. Many entrepreneurs have found it more cost-effective to focus on specialized or niche markets. Consider the following advantages and disadvantages:
- Fewer competitors
- Market may be underserved
- Possible to charge a higher price
- Customized offering
- Easier to find those interested in niche products/services
- Smaller target market
- Turn away customers who don't fit niche
- Marketing messages must be focused on niche prospects
- Niche customers must have higher transactional value or be repeat buyers
If a travel agent wanted to focus on a niche market, she could focus on adventure travel for professionals, including cruises, safaris, and exotic destinations. Although this niche market is smaller and more specialized, her customers will generally go on two- or three-week vacations and spend more for customized arrangements.
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