Kim Gordon in her article in MSNBC/Entrepreneur.com says:
You’ll rarely see a company that’s risen to the top using a shotgun approach–targeting a mass audience indiscriminately–yet this is where many entrepreneurs trip up. Failure to isolate the most-qualified niche can waste marketing funds, time and energy.
I get e-mails and phone calls from entrepreneurs who tell me "everybody" can use their product or service. The trouble is, even the most well-financed business can’t afford to reach everybody at once. And even if they somehow could, their message would have to be so generic that many different types of prospects wouldn’t feel motivated to take action.
Trying to reach everyone is a recipe for marketing failure. For many business owners, targeting their market is scary. The biggest fear is that by creating a tightly targeted marketing message, they’ll "alienate" everyone else. However, if you look at how the "big guys" target their marketing messages, you can see that targeting doesn’t ALIENATE anyone. Truth be told, those who aren’t being targeted probably won’t even take notice of the "targeted" message.
Take for example computers manufacturers’ advertising. It’s easy to say that "everyone" needs a computer, but if you look at computer manufacturers advertising, you’ll see that they tightly target their advertising message. In August, the computer manufacturers target students while at Christmas the message is definitely targeting families and gaming. Meanwhile, there’s still another market for the exact same product: businesses. Some marketing messages target larger businesses and promote servers while other messages target small business owners.
Each audience (a.k.a.niche market) needs its own marketing message and tactics. The small business owner isn’t "offended" that the manufacturer of the computer on his desk has created a message designed to speak to college student. Again, it’s very likely that said business owner is even AWARE of the message targeted to someone other than himself. Unless he’s the parent of a student in need of a computer, he probably won’t even notice the ads.
THAT is the key. When you tightly target an audience, you don’t alienate others outside that audience.