When a firm targets a narrow market better than competitors, this is known as?

Targeting a narrow market better than competitors is referred to as a market niche strategy. This approach involves focusing on a specific segment of the market where a company can serve the needs of that segment more effectively than larger competitors who are targeting the broader market. By concentrating on a niche, firms can develop specialized products or services tailored to the unique preferences of that particular group, thereby building strong customer loyalty and reducing competition.

The essence of a market niche strategy lies in its ability to cater to specific demands that may be overlooked by larger players. This often results in a distinctive brand identity and a loyal customer base, which can lead to higher profit margins due to reduced competition and better customer relationships.

While product differentiation involves creating unique products to stand out in a broader market, a market niche strategy is much more about specialization within a smaller, well-defined segment. Mass customization focuses on tailoring products to meet individual customer specifications on a larger scale, contrasting with the specific targeting of a narrow market. Process efficiency strategy, on the other hand, emphasizes optimizing internal processes for cost-cutting and efficiency rather than market focus.