The term niche market is used to refer to the target group to which a business is seeking to market their product. Niche markets are specific demographics that a marketer has identified as being especially able to benefit from a product. Often, marketers will choose to cater to a group that has been neglected by other areas of the industry in order to establish an initial monopoly and customer base. The Internet has revolutionized the idea of niche marketing, and potential customers are much easier to identify than ever before.

To an extent, most advertisers use niche marketing to market their products today. Television commercials are typically featured on certain channels that the target consumer would be likely to watch or are featured at a time when the specific demographic would likely be watching. This is the classic example of marketing. When utilizing niche marketing on the Internet, the responsibility lies with the marketer to determine how to identify a niche market and ways in which to reach that group.

Companies also use their markets to modify or create their products, not only to market existing products. If a company can identify a niche market that is not being fulfilled to as great an extent as some other demographics, they can then tailor their products and services specifically to that group, giving them an advantage. Many well known products today owe their popularity to the identification of a specific niche market for which they were created.

Not only does niche marketing increase the chances of product exposure to a group of likely buyers, but the practice also saves the marketer time and money that was once spent marketing to groups that had no interest in the product and offer little or no future business. In the past, most companies would market a product or service to whomever was available, whether on television or by another media. This practice has proven unsuccessful in comparison to marketing. Time and money is better spent marketing to those who are likely to exhibit an interest in a product.

Niche marketing can be accomplished very effectively using the Internet. One of the most popular methods of practicing this strategy is by gaining permission (either by paying a fee or by networking) to place a link on other popular websites visited by their target group. Additional practices are often successful, such as collecting email addresses, through various methods, and sending offers to those who have exhibited an interest in other, similar products. Much literature exists to provide suggestions as to how to find such potential customers.

The hang up many marketers encounter when facing the idea of niche marketing is making the mistake of believing that the practice is too narrow and will limit their market and therefore their earning potential. In fact, the opposite is true. Marketing to those who are not interested in a product wastes both time and money and is rarely lucrative. If a company is successful pioneer and is the first in their field to develop a product for a particular demographic, they can effectively establish a monopoly on that marketing group.