Niche markets are focused, targetable subsets of a market sector. A business that focuses on a niche market often tries to address a need for a product or service not obtainable through mainstream providers. A niche market can be thought of as a narrowly-defined group of potential customers. For instance, environmental waste management is a small niche within the larger waste management market.
Niche market ventures may become profitable even though they are by nature small in comparison to the mainstream marketplace. The advantage of specialization and focusing on small, identifiable market segments can compensate for the difficulty of not having economies of scale. Niche markets may be ignored or discounted by large businesses for "small potential;" making the niche market continue to be available to smaller businesses.
