Posted in Marketing and Strategy Terms, Total Reads: 504
Definition: Competitive Niche
It is a specific segment in the market in which a company holds the competitive advantage or can compete effectively given its resources and competencies. There is a possibility that in that niche segment, the company wins a major share. It is based on the concept that, the narrower your target group is, the greater the company will hold the competitive advantage. The company focuses effort and resources on a niche segment where the strength of the competitors is low or there are very few competitors.
This trend is common in small firms. To gain the competitive advantage in such a niche segment, a company either focuses on cost or on differentiation. If the focus is on cost, the company aims to minimize the cost of production in that segment. However, if the focus is on differentiation, the company creates the competitive advantage by providing a differentiating product or service not given away by any competitor.
Examples: when FOX launched the FOX Crime channel, their main aim was to target the niche segment of viewers interested in television series and movies related to crime, horror and investigation and therefore gain competitive advantage out of it.
However, there can also be potential problems with the competitive niche approach if the niche is so small or so specialized that it does not give an adequate return to the companies.