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What Is a Niche Business?

Niche marketing is a popular topic at business conferences.
Most businesses, like those that do computer repair, can be narrowed to a niche segment.
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  • Written By: Alex Tree
  • Edited By: O. Wallace
  • Last Modified Date: 18 December 2014
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A niche business offers a targeted service or product, usually one that mainstream businesses do not provide. For example, a lot of companies offer basic landscaping services, but noticeably fewer use pet-safe and low-allergen plants and chemicals. Niche marketing is not a new technique, but starting businesses, niche businesses in particular, is risky because it can fail for any number of reasons. Sometimes a niche business is too obscure, and most people do not need the service or product that they offer. Other times, the market is already saturated with similar businesses or becomes saturated after the business idea becomes popular.

Niches can be identified by thinking of a business, like “house cleaning,” and then narrowing it down to something like “house blind cleaning.” This company would specialize in cleaning window blinds, which is something many mainstream house cleaning businesses refuse to do or charge extra for. Another example is “computer repair” narrowed down to “Apple® computer repair.” Most mainstream businesses that offer a service can be summarized, then narrowed to a niche business. It is also possible to have a niche product, like earplugs that protect people’s ears while still allowing them to hear everything, just at a lower volume.

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This type of business strategy is not a new one, but it gained a lot of popularity once it was introduced on the Internet. Internet marketers frequently use and teach niche marketing. In fact, people pay substantial amounts of money to participate in courses and conferences surrounding the subject. These people are usually looking for new niche business ideas or ideas on how to expand their current niche business. On the other hand, some people do not own a niche business, but instead advertise it as an affiliate.

A niche business cannot thrive without people needing their services or products. Sometimes people choose businesses that are too niche. For example, a woodworker decides to specialize in crafting solid oak computer desks, but gets no business for months, then only a few customers after heavy advertising. Such a small niche is called a micro niche, which usually needs to be very popular to succeed or paired with other micro niches to gain enough profit.

Another potential problem for a niche business is market saturation. The purpose of creating a business around a service or product few people offer is little to no competition. Sometimes people have already discovered a niche and cornered the market. While it is still a very focused service or product and technically a niche, it is probably no longer profitable for a new business unless the service or product can be improved. Niche markets can also become saturated after a person starts a business, leading to direct competition, sometimes with companies that have larger budgets and established customers.

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