Niche or focus competitive strategy is attention on a narrow piece of the total market. The narrow piece can be a small geographic area, specialized requirement in using a product, or a special product attribute combination that appeals to only a small segment. Local bakery is a good example of niche market position. Automobile manufacturers catering to only sports cars is another example of niche strategy.
Niche market positions are attractive when:
The niche is big enough to provide a profitable business opportunity and growth.
The market leaders do not serve the niche and show no intention of serving it.
It is costly for multi-segment players to service the niche.
The industry has more niches