Question

It is often said of niche (or "focused") strategies that one would like for the niche to be "big enough, but not too big". What does that mean?

Answer 1

Nice or focussed strategy basically intend to focus on limited target people and it offers specialized and customised services. This helps in attracting and retaining the limited target people and the conversion ratio of higher than the mass strategy approach. Niche approach gives competitive advantage and the strategy are not easy to copy by others. The focussed strategy can do lot of innovations and experiments as the approach is applicable only for limited group of people. Niche strategy also has risk associated as when the focussed approach fails it will results in a total destruction. Thus one who would like or go with niche should be big enough and they have the capability to drive that focussed marketing and operations strategy carefully and consciously. At the same time it can't be too big because scope of niche development is limited and the same won't be applicable for larger group of people.In addition the market share gain from the niche or focussed approach will be lower than the company who aggressively drive strategy for massive audience. Thus niche has limitations to expand and attract more people and the business opportunity which can be leveraged out of this niche will be also limited.