Specializing in a specific market is called a niche market. Niche marketing is the practice of promoting a specific line of products or services to a niche market.

Generally, a niche strategy is a good way to enter the market for a new business. It usually takes fewer resources for the start-up, due to lower marketing costs and the ability to start on a smaller scale. Success rates tend to be higher for niche businesses since they have less direct competition. Without much competition, niche businesses can charge higher prices, which allows for quicker positive cash flow during start-up and better margins once profitable. Via the Entrepreneurial Mind

Choosing to narrow your marketing efforts to a niche market creates a 'concentration effect' - whereby the more narrow and specialized your focus the more knowledgeable you become of the customers' needs.

Most companies try to serve a wide array of customers and end up with a amrket that is a mile wide and an inch deep.

The Urban Dictionary defines mile wide and an inch deep as: Impressive at first but with experience, found to be stupid or unimaginative<</b>

Whereas the niche marketer is more concerned about depth - an inch wide and a mile deep - which allows them to gain unique insights and an understanding of the customer. This unique understanding is what they use to shape their marketing and business strategy. Plus they make more money than you do trying to serve all the needs of the market.

Niche marketers will even use these unique insights to modify or even reinvent their business model. So the next time you take a look at your competition, look at their business model and how they compete. You might just learn something about your market from your competition.

Make sure that the niche market is large enough to provide a reasonable return-on-investment. Study the market, talk to prospects in the market and ask lots of questions until you feel you have learned what they really want.

Then take what you have learned and do something with it to modify your approach to a niche market.