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Know what a niche market is and what its main characteristics are.
Definition of Niche Market:
According to Philip Kotler, a niche market is a group with a narrower definition (than the market segment). It is usually a small market whose needs are not being well served [1].
Complementing this definition, the niche market (unlike the market segments that are larger and easily identifiable groups), is a smaller group (of people, companies or organizations), with specific needs and / or desires, willingness to satisfy them and economic capacity to carry out the purchase or acquisition.
Niche Market Characteristics:
In general, a niche market has the following characteristics:
It is the fraction of a market segment [2]:
That is, each niche market has some peculiarities that distinguish it from other niches or the segment as a whole.
That is, each niche market has some peculiarities that distinguish it from other niches or the segment as a whole.
For example: People who use air transport to travel to a distant place represent a market segment. For their part, people who, in addition to traveling by plane, choose the "executive class", represent a "niche market".
It is a small group: It is made up of people, companies or organizations in a reduced amount (compared to the market segment to which it belongs). For example, the number of executives or people who choose "executive class" on an airplane flight is much smaller than the number of people traveling in the "economy class".
They have specific or similar needs or desires: They usually consist of very particular needs or desires, and they also have their degree of complexity [3]; so this group is willing to pay an "extra" to buy the product or service that meets their expectations.
For example, people who choose "executive class" on air flights have very special requirements, such as: more space to stretch their legs, more comfortable or padded seats, a more selective menu of food and drink, more personal qualified in attending them, music, video, special pillows, etc ...
There is a willingness to satisfy their needs or desires: That is, they have a "good disposition" to acquire a product or service that meets their expectations, and in the case of companies or organizations, have the "ability to make purchasing decisions" .
For example, people traveling in "business class" request their passage for that category of travel, even without the need for airline personnel to suggest it.
There is economic capacity: Each component of the "niche market" has sufficient economic capacity that allows it to incur the expenses necessary to obtain the satisfaction of its need or desire. They are even willing to pay an additional amount (on average) for better satisfaction
[2]. For example, people who choose "executive class" in any airline, have the economic fluency enough to pay extra for that luxury.
calls for specialized operations:
whilst there are wishes or dreams with precise and even complex characteristics, the area of interest marketplace calls for specialised providers and able to meet their expectancies.
For example, "business class" customers expect airlines to provide them with an exclusive window where they do not have to queue, a more comfortable space in the waiting room, qualified staff to attend, special memberships, executive client cards, etc...
There are very few or no supplier companies: In those market niches where the particularities and the complexity of their needs or desires require a high specialization, it is normal that there are no more than one or two supplier companies, there may even be no .
It is large enough to generate profits: According to Prof. Philip Kotler, an ideal niche market is one that has the size needed to be profitable [3].
Additional Notes:
A very important detail to be taken into account by marketers is the tendency of companies to locate and develop "market niches"; which is why the term
"nichologist" already exists; which has been defined in a Monografías.com web page as "the professional specialist in the search and identification of niches in a given market context, both internal and external" [4].
Another related fact is that Prof. Philip Kotler identifies this same specialist as the "niche market specialist" [2].
Both cases allow us to visualize the importance of the niche markets and the degree of specialization they are needing.
