Niche and Specialization Marketing: What’s the Difference?

Niche and specialization sound like synonyms.

But in the world of business, they have a few key differences in how companies and marketing agencies can leverage these concepts.

Before a company can go after a target audience, it should probably determine if there is a niche or specialization.

We’ll explain the similarities, differences, examples, and benefits here.

What is a Niche?

A niche is a particular segment of a wider market that a company wants to go after, settle into, or expand upon.

For example, a fresh bread shop is in the retail business, with food, but then even narrower with a specific type of food.

And people who love artisanal bread represent the target market for this brand. But not all food lovers will be on board. Meat lovers may not frequent a bread baker.

In the marketing world, our niche is small businesses.

What is Specialization?

Specialization refers to being very good at certain tasks or elements.

A podiatrist goes to medical school to become a licensed doctor but then has additional advanced training to earn board certification for helping people with foot disorders.

Similarly in marketing, a digital marketing agency can specialize in doing some things very, very well. Some agencies focus purely on web design and creating beautiful websites. Others prefer social media marketing. Still others profess to be experts in SEO. Many agencies are full-service, offering many services in the digital realm.

Similarities Between a Niche and Specialization

Niche and specialization: These two concepts in marketing are very similar.

Both refer to a narrowing of some segment of a company’s services either intentionally or otherwise.

Let’s say the owners of a startup marketing agency came from a background in call centers before they decided to become owners. Their niche market was call centers, and they specialized in email marketing because that was what was most similar to how a call center operates.

Starting with call centers and emails were very narrow, but it was what both owners were good in at the time. And they saw enormous success in this market and specialization because of their years of experience. They spoke the language of call centers and decided to do something different with that type of marketing.

A niche and specialization both lend to expertise. Bread bakers, though catering to a specific audience, know how to bake really good bread to please their niche audience because they specialize in doing one thing masterfully.

Benefits of Niches and Specializations

Companies realize several benefits to having a niche market or specializing in certain kinds of products or services.

1. They play to a company’s strengths. A bread company is very strong in its niche market due to its specialization.

2. Narrowing of a market means the company fully understands the target audience they are aiming for, typically after performing market research. The bread baker already understands what its customers want.

3. Quick changes. Companies that target a particular niche can adapt very quickly based on feedback from their target audience because they understand what it takes to make those adaptations. A bread baker hears from a customer that blueberry muffins would be a great addition to their arsenal. Two weeks later, the company tests and tries out its new muffins, and their customers are thrilled.

When a company masters its specialty really well, it can alter its approach and diversify within its specialty quickly.

However, narrow parameters do have setbacks.

Disadvantages of Niches and Specializations

Although niches and specializations lend to a company doing a few things really, really well, they may realize over time that narrowing their target market is holding the company back.

There are a few disadvantages to this approach that companies need to understand.

1. Lack of diversification. In nature and in business, diversification is the key to survival. There are only so many types and flavors of bread that a bread backer can produce before it runs out of options. Yes, it can innovate the industry with new baking methods and exotic ingredients. Yes, if a city’s population grows the company’s market will expand. But at some point, it may have to diversify. One way to do this is to start making sandwiches or even cakes, which would be natural fits for a bread baker.

2. Lack of a target market. A company’s target market may change over time. What worked 10 years ago may not work today. A company can either switch niches (by going after a different target market) or switch specialties (by offering different products or services). Sticking with the food industry, a taco truck was the first of its kind in a thriving neighborhood. A year later, three more taco trucks came into the territory to start to take away some of the first one’s target market. The first taco truck has a choice: move locations to try to get a new target market or switch to a different type of food (like barbecue) based on what’s already available.

3. Limits growth. Having a niche or a specialty may limit growth, particularly if a target market doesn’t grow organically on its own.

4. Complacency. The phrase “This is the way we’ve always done things” can doom (and has doomed) companies in the past.

We’ll Help You Expand Your Reach

Talk to Vervology today.

We can help you expand your reach into new markets and new segments with our comprehensive digital strategies that help you identify areas that could benefit from your products or services.

We look forward to hearing from you!