What Is a Niche Product?

A niche product is one that targets a very specific audience or is used for a very specific purpose. Such products might have a large potential buyer market or may appeal to only a small market segment. In either case, marketing of these products is a specialty field that requires in-depth knowledge of both the market and the product. A niche product can be extremely successful if the quality, price point, and marketing are right.

Often, a niche product is sold to individual consumers. In these cases, the product usually saves the consumer time or makes an unpleasant task easier. Consumers are willing to buy, even if they don't use the product frequently, because the product solves a problem for them.

Cooking is one area in which niche products traditionally sell well. Well known kitchen examples include citrus peelers and garlic presses. Each of these items is used only for one very specific purpose. Yet, because extracting garlic from the clove and removing the peel from citrus fruits are difficult, messy jobs, cooks who often engage in these tasks are willing to buy the products. A garlic press could be contrasted with a wooden spoon, which is not a niche product because it can be used for a variety of kitchen tasks.

Another way to create a niche within the consumer market is to appeal to a specific subsection of the market. For example, a retail location might carry uniforms and equipment for nurses, police officers, or teachers. While such locations might occasionally be shopped by people outside of the target profession, carrying merchandise that those professionals require to do their jobs allows the retailer to create a market niche.

A niche product can also appeal to a business. As with consumer products, the business product is used for a specific purpose. An example would be a business whose only offering is custom-painted collectible wooden buildings. Colleges, museums, churches, and other historic buildings might be interested in having replicas of their buildings produced for sale in their gift shops. Such miniature buildings are specialty items and would qualify as niche products.

A company might also appeal to a business niche by offering a widely-needed, widely-distributed product that has been customized for a specific type of business. For example, customer relationship management software is used by many businesses in a wide range of industries. Some software providers, however, only license customer relationship management solutions that have been customized for real estate agents. This customization for a specific market segment makes such software a niche product.