What is a niche market? 5 examples for smarter targeting

Key takeaways

• Niche markets can help entrepreneurs distinguish their brands while lowering the cost of winning a sale
• Choose a niche market to achieve a loyal customer base, which can offer long-term financial benefits
• Consider targeting a niche market that’s on the rise or find an untapped market in your industry that has strong potential

When a pair of jeans fits like a glove and perfectly suits your style, it instantly becomes a staple in your wardrobe. Similarly, when a shopper finds a product or service that meets their needs to a T, they’re more inclined to go back to a business again and again. 

Niche businesses never go out of style for the people they’re trying to reach—and compared to a mass market, your niche market audience can help you reach a smaller yet more engaged customer base. Learn what a niche market is and how it can help small businesses grow faster. Plus, discover five examples of niche markets with high potential.

What is a niche market?

A niche market is a smaller piece of a larger market with common interests, values, pain points, and other characteristics. It’s a group of people whose unique needs differentiate them from other potential customers.

As an example, a computer company could choose a niche market like PC gamers, who often have specific needs, like backlit, programmable keyboards and the latest graphics cards. In contrast, a broad target market could include all PC users.

Business owners often choose their niche audience based on their location, demographic information (like age, income level, and marital status), and psychographic information (such as interests, values, and goals). You can also carve out a niche market based on shared behaviors—for instance, if they’re frequent travelers or early adopters of technology.

Benefits of niche markets

What is a niche market good for exactly? For most small businesses, choosing a niche target audience can simplify the process of establishing your brand. Here are three specific reasons to consider a niche marketing strategy for your business.

1. Less competition

Becoming the best company for a specific niche is always easier than being the best brand in a broader market. (Imagine trying to beat out all the jewelry retailers in your market versus just the luxury ones.) When you sell niche products or services and are very detailed about who you serve, you can stand out as an industry leader and become the perfect fit for your specific audience.

2. Lower customer acquisition costs

The majority of consumers are more likely to purchase from brands that personalize the customer experience. As you narrow down your target audience, it should become easier to create highly relevant marketing campaigns that speak directly to your audience’s unique needs. As your sales and marketing efforts become more personal—and as a result, more effective at gaining repeat customers—you can greatly reduce your customer acquisition cost (CAC), which is the average amount of money you spend to win one client.

3. More brand loyalty

Loyal customers are 23% more likely to purchase from your brand, and strong customer engagement can increase your sales by 66%. The power of a loyal customer base is undeniable. Brand loyalty is easier to achieve when your brand consistently provides exactly what your clients need, rather than trying to provide a little bit of everything for everyone.

Niche market examples

Choosing a new niche market—one that’s highly underserved in your area—is the best way to become a preferred brand for your target audience. However, it isn’t always possible to find a totally untapped market in your area. In this case, choosing a small but rising niche market can be a high-quality business idea. Here are five profitable niche market ideas to consider.

1. Vegans

Vegans make up about 2% of the U.S. population. While that percentage may seem small, it represents millions of people, and the demand for vegan products is increasing every year. Plant-based meat sales alone are expected to reach $16.7 billion by 2026, representing a more than $10 billion increase since 2020.

While veganism is best known as a diet, you don’t have to be in the food business to appeal to the vegan community. For example, a makeup company can sell cruelty-free products, while a fashion business can specialize in vegan leather bags. Even service providers like cleaning companies can speak to the values of vegans by promoting the use of eco-friendly, animal-free products. Think of ways you can market your efforts to avoid animal exploitation and preserve the natural environment to appeal to the vegan market.

2. Freelancers

With 59% of U.S. workers able to work from home, at least on a hybrid basis, remote workers have become a fairly broad market. Freelancers, on the other hand, are still a small but mighty niche market you can target if you sell products or services to other businesses, rather than consumers.

For instance, an ecommerce office supply store can cater to the mobility needs of freelancers who frequently hop between their homes, coffee shops, and coworking spaces. Software companies can appeal to freelancers’ need to streamline tasks while working for multiple clients.

3. Plus-size men

While clothing brands are increasingly incorporating inclusive sizing for women, plus-size men are still a greatly underserved market—especially in the luxury industry. This is despite the fact that the average man in the U.S. has a 40.5-inch waist, which is typically considered plus-sized. Selling fashion products to this high-potential niche market could be a powerful way to stand out and lead the shift toward inclusive sizing for all genders.

4. Left-handed people

Researchers estimate that 10-12% of the global population is left-handed. However, most of the world is still built for the right-handed majority. Selling products designed for lefties—such as left-handed scissors, guitars, and computer mouse devices—can be a great way to attract a demographic unable to find many solutions elsewhere. Your store can function as their go-to business for product alternatives.

5. Pet owners

In the U.S., 70% of households own at least one pet, with dogs and cats being the most common types. While pet owners certainly aren’t a niche market for brands that sell pet supplies or boarding services, they’re often underserved in other industries. For instance, contractors can specialize in installing doggy doors, while pest-control companies can use pet-friendly products. Bakers can make cookies that are edible and delicious for humans and their pets.

If you own a pet supply store, you can target a specific type of pet owner—for example, those who own aquariums or exotic animals. While dog and cat supplies are easy to find at any local pet store, owners of more niche pets may seek out specialized brands for more product options and more high-quality supplies.

Increase sales by targeting a niche audience

A niche market is a subset of a broader market that shares the same needs. Focusing on the right niche market can help your small business optimize your marketing campaigns, stand out from the competition, and achieve greater brand loyalty. Learn how to do market research on a small business budget to plan the best strategy for your business to stand out.