Though ‘target market’ and ‘niche’ are closely related terms, you can’t exchange one for the other. A target market is typically a broader market serving a large customer base. A niche, on the other hand, is a subset of a target market. When you break down a niche further, you’ll find sub-niches. Therefore, you can think of a target market as a collection of multiple niches or sub-niches.
Niche marketing, getting your target audience as narrowed as possible, can bring you a number of advantages. The first is that you’ll face reduced competition, which, in turn, will help you dominate the chosen niche for the long term.
Two different companies, for example, may cater to the same target market while offering different types of products or services. But a niche or a sub-niche is an incredibly specific group of people with some incredibly specific needs. A diverse customer base in a target market, for example, may include multiple groups of people like missionaries, doctors, environmentalists, homesteaders, hunters, fishers, cabin-dwellers etc. Niche marketing, however, focuses on understanding and taking care of each of these groups separately. Further narrowing would market to specific types of doctors, cardiologists instead of general practitioners, for example. How low can you go? Well, that depends on your unique business and product line.
Since a small niche or sub-niche may run the risk of weakening or disappearing over a course of time, many large companies believe in targeting a number of niches at a time. Larger companies don’t focus in like SMB businesses do, giving the SMB owner a slight advantage in personalized appeal.