What is a niche market in business – And how to find yours

What is a niche market?

A niche market is a smaller, more defined group of people with specific needs that aren’t being fully met by the mainstream. Instead of trying to be all things to all people, businesses that focus on a niche dig deep into serving a particular audience really well.

That might sound limiting, but it’s actually where the magic happens.

Finding your niche doesn’t mean giving up on growth. It means choosing to focus your energy where it counts, so your message lands, your values resonate, and your customers feel like you truly get them. And when that happens, you stop needing to shout louder than the competition, because you’re not in the same race.

We’ve seen it time and again, the strongest results often come when an organisation leans into what makes it different. So if you’ve ever felt spread too thin or unsure who you’re really speaking to, it might be time to stop casting the net wider, and start going deeper.

Why Niche Markets Matter More Than Ever

In a world saturated with messages, choice, and noise, niche markets aren’t just a nice idea, they’re a survival tactic.

Trying to be everything to everyone isn’t just exhausting. It’s expensive. It waters down your offer, clouds your message, and makes marketing feel like guesswork. But when you commit to a niche, everything sharpens. Your audience is clearer. Your story gets stronger. Your decisions get easier.

This has never been more important than right now. With budgets tighter, attention spans shorter, and values-driven choices on the rise, people are looking for businesses that stand for something – not just sell something. And niche businesses do that well. They speak directly to the people who need them, in a voice that feels familiar and trustworthy.

We work with organisations that serve complex needs—climate-conscious farms, overstretched marketing teams, NHS comms leads navigating regulation and real-life pressure. None of them win by casting a wide net. They win by showing up with focus and intention.

Two methods of niching

While there is debate over what actually defines a niche, any attempt to target a segment of your available market – rather than the whole thing – can be thought of as ‘niching down’. 

Some marketers use jargon terms such as ‘vertical’ and ‘horizontal’ niching, but such definitions are imprecise and vary depending on the source you read. So for clarity, this article focuses on two methods of niching down: by offer and by audience. 

Niching down by offer

Whether you are an entrepreneur looking for startup ideas or an established business hunting for new opportunities, combining what you have a passion for with what you are good at is a great way to discover offer niches.

Start with a simple Venn diagram. Enjoy driving and have a hairdressing qualification? Look into setting up a mobile barber service. Ta da! This is a niche. But you could go further and identify some sub-niches.

Try this simple Google trick. Type ‘haircuts’ in your browser bar. Do the autocomplete suggestions add any avenues for niching down further? 

Next, hit search and scroll down to the ‘People also search for’ section. You may find that certain styles are attracting searches (curly hair, straight hair). These are potential sub-niches (e.g., ‘mobile barber specialising in curly hair’).

For more inspiration, hit the image tab and look at the categories that appear at the top because these are all indicators of customer interest. Could you specialise in fades or tapers? 

Some categories are likely to group together different types of people (e.g., men, women, teens or toddlers) which brings us nicely to the second method of niching down: by audience.

Niching down by audience

Niching down by audience involves tailoring your offer to a specific group of people. Using the same example, you would first segment your market as follows:

• Geographic: This can be as specific as a street or as broad as a continent. In the mobile barber example, this would be determined by how far you’re willing to travel.
• Demographic: External categories such as age, gender, level of household income and marital status. Do you specialise in providing haircuts for teenagers or older men? Perhaps you could target people on a budget or those with deep pockets.
• Psychographic: Internal categories such as attitudes and beliefs. Here you could explore providing haircuts geared towards particular lifestyles (emo, sports, high fashion, etc.) We’re going to return to this when we focus on our own values-based niche.
• Behavioural: People can also be segmented by the things they do, including the devices they use, the social media platforms they visit and the activities they pay for. Home haircuts for Instagram influencers or people who travel regularly, for example.

Combining these segments will deepen the niche further, creating what are sometimes termed ‘micro-niches.’ Offering haircuts to wealthy older businessmen on LinkedIn who value luxury would be an example of this.

Of course, the savvy business owner will realise that these two approaches to finding a niche overlap because a niche product or service will appeal mainly to a specific type of buyer – and vice versa.

Honing your messaging

Done properly, niche marketing will transform your brand messaging for the better by clarifying two vital fundamentals of a successful business: your ‘why’ and the ‘who’ you are appealing to.

Dig deep into the reason you are targeting a specific niche and you will discover the most powerful catalyst for success: your ‘why’. Returning to the mobile barber example, if you choose to specialise in toddler haircuts, is this because you have experience with young children and know how to settle them? If you targeted teen haircuts, was that because you empathise with the need to find your identity at that age? Did a talented barber help you feel good about yourself – or did you have a bad experience and went into hair styling to right that wrong. 

If you hit some strong emotions, you’re doing this bit properly. It’s exactly this level of soul searching that will give you a massive competitive advantage because once you identify your ‘why’ you can start turning your marketing messages into stories.

Here is a link if you want a deep dive into writing a compelling brand story.

To really understand and meet the needs of your audience, you need to know as much about them as possible. While every customer will be unique, there is a way to distill their essence into a fictionalised ‘avatar’. We call this character a ‘marketing persona’ and by niching down by audience, you will have done some of the legwork for this.

You can read more in-depth guidance on creating personas in our related articles, but gathering data from current and prospective clients is vital to the success of that process. Reaching out to ten of your customers and booking a half hour Zoom call with each of them is a great way to collect some rich qualitative data. 

To reach a larger sample, conduct an online survey using SurveyMonkey or similar. 

More advantages of niche marketing

If creating a powerful story and getting deeper insight into your customers wasn’t enough, there are several additional benefits to niching down, including:

• Less competition (the pie may be smaller, but you can get a bigger portion!)
• Faster brand awareness
• Easier to create a powerful unique value proposition (UVP)
• Affords some protection from price wars (you can compete on the unique value you provide) 
• Higher ad conversion rate (up to a third higher, according to some sources)
• Ad campaigns with better return on investment (ROI)
• Easier to become an industry specialist (securing more publicity, such as speaking opportunities)
• Stronger industry contacts
• Nuanced understanding of the supply chain

When not to Niche?

So, what’s the bad news?

Targeting a niche does have its disadvantages. The main one is that your market will inevitably be smaller.

Looking again at our example of the mobile barber, it is clear that the more specialised you become, the smaller the potential market becomes. Many people wouldn’t want a barber to come to their home, and if you then start ruling out people by age and hair type and household income, your market quickly shrinks.

Eventually, you will reach a level where the demand simply isn’t high enough.

Other disadvantages include:

• Trending niches can be short-lived
• Niche markets can quickly become saturated if you enter too late
• Content and ads need to be more carefully created
• Keyword research is more time-consuming

Tools and Techniques to Research Your Niche

You don’t have to guess your way into a niche. The right tools and a few well-placed questions can bring a lot of clarity.

Start with what you already know. Who do you love working with? What projects felt like a perfect fit? Those instinctive moments are often rooted in a niche you haven’t quite named yet.

From there, get curious. Tools like Google’s Keyword Planner or Answer the Public help you understand what people are searching for. Look at search volumes, gaps in existing content, and the language your audience actually uses—not just what the industry says.

Social listening (even if it’s just lurking in Facebook groups or LinkedIn threads) can also uncover recurring problems or unmet needs in your sector. These are gold dust.

Next, check out your competitors. Not to copy,but to see who they’re not speaking to. Those gaps are your opportunity.

Lastly, ask your audience. Interviews, surveys, quick feedback loops – whatever suits your size and stage. Real conversations beat assumptions every time.

It doesn’t need to be overcomplicated. With a mix of data, intuition, and a few open questions, you’ll be surprised how quickly a niche starts to show itself.

Three Real-Life Examples of Successful Niches

1. Patagonia – Sustainability‑First Outdoor Wear

Targeting environmentally conscious outdoor lovers, Patagonia prioritised ethical sourcing, transparent supply chains, and activism from day one.

Their focus on sustainability (rather than just outdoor apparel) allowed them to charge premium prices, build a fiercely loyal community, and extend into gear repair, activism campaigns, and documentaries.

Their mission-first approach helped shape their niche audience of eco-conscious adventurers and gave them a global brand identity rooted in purpose.

2. Lululemon – Yoga & Mindful Athletic Apparel

Lululemon carved out a niche by designing technical, stylish athletic wear specifically for yoga enthusiasts before expanding to broader wellness audiences.

Their early focus on functional, community-backed yoga clothes justified higher price points and nurtured intense brand loyalty.

Even as they’ve grown into everyday athleisure, the brand remains rooted in performance, mindfulness, and community events, proving the strength of a niche-first strategy.

3. Chewy– Pet Food & Supply Subscriptions

Chewy didn’t try to compete with general e‑commerce giants like Amazon. Instead, it zeroed in on pet owners wanting hassle‑free, high-quality auto‑refill deliveries backed by standout personalisation.

This laser focus on service for a specific group gave Chewy a distinctive identity, leading to over $11 billion in sales and an acquisition by PetSmart for $3 billion in just six years.

How Vu Online use niche marketing to attract mission-aligned clients

We explained earlier that markets can be segmented by psychographics. These are psychological profiles of customers and include attitudes, beliefs and values.

Our values include providing customer-centred advice, working towards a green web, delivering hands-on support, helping businesses push boundaries and being human. Everything we do, from becoming a B Corp to collaborating with Positive Nature Network events is guided by these values.

We want to work with mission-aligned customers, so we have niched down by audience to target businesses that also use values-based decision making. Grounded in our ‘why’ and with a clear audience in our minds, we can tailor our messaging to speak powerfully and directly to them. We can use storytelling to illustrate how we can support them in achieving their values-driven goals.

As a result, we have not only profited through digital projects, we have secured speaking opportunities and built networks of like-minded people. 

If you share our values and would like some hands-on help in finding your niche, please reach out and connect with us.