Definition and Examples of a Niche Market

A Niche Market Can Be Key to Small Business Success

Artisan Foods
••• Image (c) Luis Davilla / Getty Images

A niche market is a focused, targetable portion of a broader market in which specialized products or services can be sold. Catering to the unique demands that aren't being addressed by mainstream providers, businesses pursue niche markets as a way to build loyalty and revenue with a largely-overlooked audience.

Rather than offering a general cleaning service, an entrepreneur might pursue a niche by offering exclusively floor polishing services. Another business in the same city might occupy a separate niche, specializing in the use of exclusively biodegradable cleaning products. Markets of any discernible size contain multiple subsets, although not all of the possible niche markets will be worth targeting.

Niche Market Benefits

There are a number of benefits to targeting a niche market:

  • Reduced competition: Small businesses may not be cognizant of a particular niche market, and large businesses may not want to bother with it. Be aware that this is usually not a long-term condition; once one business has established and vetted a profitable niche, others will be quick to move in.
  • Focused Business Efforts: Targeting a narrower audience allows businesses to focus their efforts on catering to specific customer needs.
  • Providing Expertise: Becoming known as the specialist in a particular product or service makes a business more likely to be recommended by its customers.
  • Establishing a Toehold: Solidifying a position in a niche market can help a business confidently expand their offering into new, broader markets.

The trick to capitalizing on a niche market is to find or develop a segment that has accessible customers, room for growth, and no dominant competition.

Examples of Niche Markets

The food industry has many exemplary niche markets, including a huge demand for artisan foods.

Micro brewing has become a popular niche in North America as beer connoisseurs increasingly prefer craft beer. While overall U.S. beer volume sales were down 1% in 2018, craft brewer sales continued to grow at a rate of 4% by volume, encompassing 13.2% of the U.S. beer market.

Organic product sales continue to grow in response to concerns over the hormones and pesticides used during industrial food production, and the U.S. organic market broke the $50 billion mark for the first time in 2018, hitting a record of $52.5 billion in sales, up 6.3% from the previous year.

Specialty food trucks have become a popular fast-food option across America, and organic delivery services such as Good Eggs allow customers to shop online for fresh, local foods, and receive door-to-door delivery with their purchase. Sales of gluten-free products in the U.S. topped out at $17.6 billion in 2018, and this figure is expected to grow at an annual rate of 9.1% between 2019 and 2025.

Consumers buy lots of organic pet food, as well, representing a consumer cross-over between two separate niches. Pet owners equip their dogs and cats with everything from halloween costumes to personal floatation devices, and Americans spent $75.38 billion on their pets in 2019, including grooming, exercise, boarding, and medical services.

Since 2014, Rumpl, maker of the "Original Puffy Blanket", has targeted a niche intersection between backcountry enthusiasts, travelers, and green consumers, offering a line of down blankets. Recently, the company found yet another niche within the outdoor market that was ripe for picking: dog owners. The team created a kickstarter to gauge interest in the development of a slightly modified version of their original product, made to accommodate adventurous dogs. By researching potential niche interest while simultaneously raising money for the project, Rumpl was able to vet a new niche within their existing market before spending additional funds on product development. The company has raised $78,000 through their promotional effort—more than twice their original goal—all while gaining data, customer feedback, and new sales leads.

Developing a Niche

By diligently researching niche markets, a business can determine what unique segments already exist, and explore where new ones could be successfully developed. Profitably meeting the demands of a given audience depends on specialization, quality assurance, and communication with one's target audience.

Article Sources

  1. Brewers Association. "National Beer Sales & Production Data." Accessed Feb. 11, 2020.

  2. Organic Trade Association. "U.S. Organic Industry Survey 2019." Accessed Feb. 11, 2020.

  3. Grand View Research. "Gluten-Free Products Market Size, Share & Trends Analysis." Accessed Feb. 11, 2020.

  4. American Pet Products Association. "Pet Industry Market Size & Ownership Statistics." Accessed Feb. 11, 2020.