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Niche vs Segment: What's The Difference?

        posted by , May 05, 2013

Selling is about targeting a market.

It's about getting the right product to the right customers at the right time with the right message.

The two most common marketing strategies used to target markets are niches and segments.

Niches and segments are defined by factors such as price, quality, location, demographics and psychographics.

So what's the difference? What makes a target a niche instead of a segment?

The differences are subtle:

Niches Are Small, Segments Are Big

Niches can be very small. A niche can be the best pizza in a small town.

Segments tend to be bigger. A segment is economy cars or high end cameras.

Niches Avoid Competition

Niche marketing is a strategy used by small firms to avoid competing with a market leader.

If you're a small shop you don't want to compete with big box retailers directly. They have purchasing power and supply chain capabilities that make them tough for a small company to beat.

A small retailer might pick a niche such as fine wine or hockey equipment that avoids direct competition with large competitors.

Segments Defend Leaders From Niche Competitors

Market segmentation is a strategy that's deployed by large firms seeking new sources of growth. A market leader might use segmentation to find new customers.

In many cases, a large firm uses segments to engage their competition. For example, two large food companies are engaged in competition to lead the market. When one develops a new segment (e.g. organic food), the other follows.

Large firms may also develop segments as a defense against niche competition. For example, a large retailer in Canada notices that niche competitors are succeeding in the hockey equipment market. They develop a hockey segment to engage the competition.

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