According to Advertising Age Today’s Niche Marketing Is All About Narrow, Not Small.
It’s been a LONG time since I thought of defining a target or niche market as focusing on something small. I guess that’s because I was taught by a true visionary who snapped me up right out of college and set me on the path of true marketing enlightenment. Her tenure in the trenches of selling radio advertising prior to opening her own agency meant she was extremely well versed in the finer points of targeting your marketing message.
According to the article:
So rather than equating niche with "small," think "narrow." As in narrowly targeting a group whose self interest/self concept is so clear that a marketer can offer something ultrarelevant and vastly different from alternatives. Then the scarcity principle allows the marketer to charge a premium, reaping higher margins.
When you truly begin focusing on a niche market, you create an offering for which there are few alternatives. You become a specialist and suddenly the generalists, no matter what their size, look like pretenders to the throne.