Advantages & Disadvantages of Market Segmenting or Niching

by Jul 7, 2020Making Money

“Jeff, you need to NICHE DOWN!” says my mentor.

I remember being a jack of all trades and doing just about everything.

I’m sure you have heard of the terms “segmenting the market” or “niching down”.

What does it mean to segment the market?

According to, it is defined as

the division of a market into identifiable groups, esp to improve the effectiveness of a marketing strategy

If you are thinking of starting a blog, you would have some idea of who you are going to write for.

Segmenting your market is one of the important first steps when learning how to make money online for beginners or how to make money from home without any investment.

For examples of market segments or niches, check out our niche market examples or freelancing websites.

Let’s examine the advantages and disadvantages of segmenting the market or niching marketing.

Before that, you may want to check out my course: The 4-Hour Agency – How to start, grow and scale a 6-figure agency


Advantages of Segmenting the Market / Niche Marketing

1. You speak to your market segment’s needs and desires

Nobody can sell to everybody. If you are targeting everyone, you are targeting no one. By segmenting the market, you get to customize your message specifically for that market segment. Your marketing message tends to be much more effective than a generic one. Your message is more precise and relevant to your target audience. By niching your market down, you can speak directly to that niche’s needs and desires more precisely. Hence, they would more likely be convinced.

2. You get to know your market really well

When you focus on serving a single audience, you get to know your market segment really well, better than your competitors do. By knowing your market segment well, you begin to speak in their language, their lingo, and you understand what they really want, what drives them, and what keeps them awake at night.

All of this pervades your sales copy, your advertising copy, your emails, and everything that you do. Just by being able to identify with and speak to your audience, you have a huge advantage over a competitor who tries to cater to everyone.

3. You create instant authority

By niching down to a market segment, you create instant authority for yourself. People want to work with specialists, not generalists. It is better to be the authoritative go-to guy for a specific niche than to be a jack of all trades.

Also, specialists can command premium prices over a generalist, simply because they are perceived to be an expert in the niche. Just take the example of the medical industry – a specialist doctor gets paid way more than a general practitioner, even though he knows only one thing, but he knows it really well.

4. It’s more cost-effective

If you try to target everyone, your advertising dollars are wasted on those audiences who are not within your market. By segmenting your market, and speaking precisely to that segment only, your resources are spent more effectively and in a laser-focused way. Nobody, even the biggest brands, have an unlimited budget. For small businesses with lower budgets, it is even more important to segment your market.

5. You get to work more efficiently

Because you are an expert in the market segment, everything in this segment becomes second nature to you. You begin to do things quickly and effortlessly. Compare this with the usual do-everything freelancer where every new project is a fresh start. You cannot leverage on your previous experiences, and the learning curve for every new project can be steep.

For example, a programmer can get freelance coding jobs more easily by focusing on serving a specific market, as he/she can truly become a master of that market.

Also, when you are focused on a single market segment, you do not have to keep looking for new leads or new markets. To get more income, you only need to look at your existing market segment and ask yourself – how can I give them more of what they want?


Disadvantages of Segmenting the Market / Niche Marketing

1. You give up the forest for the tree

While it might appear true that market segmenting makes you give up the rest of the market, over the long run it still makes sense financially.

Moreover, it doesn’t mean you start rejecting everyone else not within your target market. You can set up two businesses as I did – one is for your niche only, and the other is a generic agency for everything else. So if an opportunity comes up – one that is outside your niche – you can still evaluate it and see if you want to take it on. But your focus should still be on your niche.

Once you conquer your niche, you will get to expand to other niches. It could you related and complementary to your first niche. Or it could be something totally different. But conquer one tree first, then move on to the next. You can’t win the entire forest at one go.

Read also: How to start a blog on Facebook

2. You might get it wrong

What if you enter the wrong market segment? Then you’ll need to find a new one.

However, nothing is set in stone. You can decide on a niche today, and totally change your mind tomorrow. So don’t worry about making the wrong decision. In fact, ALL niches can make you money.

3. The market segment may change

Nothing is forever. When characteristics of a market segment changes, you will need to be quick to adapt and switch market segments if necessary.

However, as my students learn in The 4-Hour Agency course, it’s better to think in terms of how you can better serve a specific market, rather than in terms of who will buy your service or product. That way, you never have to switch any market segment.

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