
You probably have read already about Chris Anderson’s Long Tail concept to describe the niche strategy of business is very well known (http://en.wikipedia.org/wiki/The_Long_Tail)
Here is my attempt:
If you focus on a small niche, the members of that tribe will easily consider you as the problem solver for their specific issue. The more specific your target niche is, the less efforts and resources will be necessary to outstand from your competition.
Let's consider an example: There could be many English to Spanish translators, but how many are experienced in the broadcast industry? How many of these are experts in signal measurement devices and protocols... If you find the way to proove your expertise in such restricted area, guess who clients in that specific industry will call next time they need a quality translation. With that perspective you could become the king of mambo. Your kingdom will be restricted, but you will lead it. (Of course you will need to find the way to market yourself correctly to the target market.)
c. Compete for sincere love: The less obvious your niche is, the less competition you will have. Who are you really? Where are the people you can connect with? If you connect at an emotional level you will be remembered. Relationships are what matter the most.

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