A niche market is a division of the financial market in which the focal point is concentrated on a particular product. The market niche describes the product’s features, such as price range and quality, which are expected to be satisfied within a given demographic area.
It is a small but lucrative sector of the market that is suitable for focused attention by a marketer. These types of economic niches could not exist without such attention being focused on recognizing and acknowledging the needs of consumers that are not being met by competitors, and by presenting such products that satisfy those needs. For instance, what is offered in one area or region may not be offered in another. This is simply because research has proven the service or product to be more successful in that one particular area because it satisfies the needs of the consumers better.
One of the most common examples of an economic niche is that of small business owners attempting to get loans from traditional banks. More often than not, small business owners are turned down for such loans when compared to larger businesses. During times of financial strain, institutions, such as banks, usually postpone or decline their services, especially to those of small businesses, while credit unions carry on with business as usual. Banks try to steer clear of the smaller business loans because the fixed rates of these types of loans are too high for them to be cost-effective or beneficial. They are considered to be a “bad risk.” The banks tend to aim for larger loans for businesses that are more established and financially secure.
Since most banks deny small business owners the funds that they so desperately need, they have no choice but to seek financial assistance from other institutions that are willing to provide the same loans but with a much higher interest rate. This implies that the majority of credit unions’ economic performance during such recessions accentuates their talent of providing funds, which is the livelihood of all small businesses. The biggest issue here is persuading these small business owners to trust credit unions in providing them with business loans. Most Americans are unaware that credit unions have been providing small business loans since the beginning of their establishments in this country more than 100 years ago. The only difference is that these loans were provided under different titles such as home equity or unsecured loans and even through credit cards.
Due to the lack of credit opportunities, most small business owners are forced to finance their capital needs with credit cards that have high interest rates and can also scar their credit history for years, again, making it impossible for them to be approved by a traditional lender.