What is a niche market

niche market

Definition: niche market

At the niche market it is a small (sub) market of an often very large overall market, whose customers require modifications or special variants of products. In particular for industries that are actually set up for the production of large numbers of items, this means an enormous challenge in aligning business processes with the customer requirements of small sub-markets.

Opportunities and challenges of the niche market

Across all industries there is the phenomenon of the niche market, which means that there are significantly more articles and product variants than if the products can be offered in a more standardized way. For companies, working on a niche market makes sense if the additional revenues generated by the product variant exceed the additional costs for the variants. In addition, cultivating a niche market can have a positive impact on the entire range and on the image of the entire company. In these cases, niche markets are often even served at cost or even with a negative contribution margin, since the overall benefit outweighs the pure cost calculation in the overall view.

Especially in the Automotive industry In particular, utility expectations are met with a small, stylish and sophisticated modification of series vehicles. These niche market vehicles then pay off through their media presence and the fascination of customers, which can ultimately be converted into sales.

Niche markets as employment drivers in developed societies

Another function of the niche markets or special products has to do with the productivity of the individual levels of trade. In the case of niche products, there is a considerable need for advice from specialists who, for their part, have to combine a broad with a deep range. Many special properties, rarities or emotional components can be experienced in a product contact phase. Niche products therefore make a contribution to strengthening the retail function and can also be part of a survival strategy against digitization.


  • Very high degree of customer benefit with small quantities at the same time
  • Higher willingness to pay than for generic products or in the mass market
  • Niche markets are served through sophisticated strategies