The advantages of niche marketing are focusing on more profitable market segments, ability to establish solid relationships with members of a market segment and increased return on investment for marketing dollars. Disadvantages of niche marketing include increased difficulty in exposing a product to a broad spectrum of consumers, inability to create mass market appeal and limited sales potential. The effectiveness of niche marketing depends on the product.
When a business is able to focus on a particular market segment or niche, it is able to hone its marketing messages to be more appealing to that particular group of people. As a result, the group buys the product in increasing numbers because they have an appreciation for the product and how it is being marketed. Marketing strategies that focus on a particular market segment are easier to manage and also less costly because resources are focused on high-quality promotional efforts that impact the target audience, versus lower-quality promotions that do not speak to any one particular type of consumer.
Products that are made for mass markets are not sold with niche marketing strategies. These products are often commodity items purchased by most people, and therefore the marketing strategy employed aims for mass appeal.