A niche market is a small, specialized market segment. This type of market is usually characterized by a very strong demand for a specific product. By using a niche market, you could enter a small, protected sector that has strong needs, and ultimately build massive profit. Examples of niche market is children clothes & toys
It’s a misconception to think that you have to get involved in a huge business project before you can make profits. Big business projects usually require big amounts of capital, enormous risks and one’s undivided attention. This explains why so many people believe that massive wealth is far beyond their reach. They simply don’t have the capital and they can’t afford to take these risks.
Benefits that a niche market offers
The benefits that it offers you are explained below
Insensitive to price
Products for a niche market are a lot less sensitive to price than products for the general market. This means that consumers will be less inclined to shy away from high selling prices than they would be in the case of an ordinary product. Compare a speech impediment program to children clothes. There are general price norms for clothes. These norms don’t exist for speech impediment programs. Clothing caters to a basic need, whereas the problem of solving a speech impediment is a specific need. Products in a niche market are scarce, because, a niche market, by definition, only serves a small market segment that involves relatively few suppliers.
Less sensitive to competition
Every business person knows that competition in a specific market segment can seriously damage your profits. The more competitors there are, the more parties are taking a slice of the pie. Competitors often have less influence in niche market than in general markets.
The reason for this is that the variety of products, which are available to the niche market, is limited and the customer demand is so high that they will most likely acquire all the products that they can lay their hands on.
Small financial risks, big profit potential
Niche markets offer the benefit of higher selling prices, which result in much higher profit margins. They also offer low – cost structures, due to the reasonably small business setup. A large infrastructure is required in mass markets to accommodate the large volume of sales.
The volume of sales for business that focused on a niche market is very small, but the profit per item is large enough to easily compensate for this. This means above average profits with a small financial risk. Niche markets offer you the opportunity to obtain a powerful position in the market and to make large profits