I want to understand why the term Niche Marketing is associated with Market segmentation & why many analysts?

& why many analysts regard a niche marketing approach as dangerous

I’m not aware of anyone who considers niche marketing to be dangerous.

“Niche marketing” usually refers to focusing some marketing efforts on a narrow field, rather than broad-based audiences.

I’m not sure what “market segmentation” refers to in your question; it probably just means the notion of slicing a large market into smaller niches.

For example, if I sell lawn mowers, I might focus 10% of my marketing budget to target landscaping contractors, who buy multiple lawn mowers each year (perhaps I’d buy ads in industry publications, or do a direct mailing; and another 10% of my marketing budget to reach managers of apartment properties that have landscaping staff; I might budget 20% of the marketing budget to reach resellers (dealers, stores) that sell lawn mowers; and I might allocate the other 60% of my marketing budget to reach consumers.

If I sell herbs and spices, I might choose to allocate some of my marketing budget to consumers who seek specific health benefits from herbs and spices, as compared to consumers who simply seek flavor.

If I sell two-line cordless phones, I might target small businesses and perhaps even a specific industry (dentists or pawn brokers) that my research indicates are likely buyers of two-line cordless phones.

Every product sold serves multiple “niche markets,” and every market can be divided into segments.

If there is any danger, it would be in focusing too much on a single niche or segment, and missing opportunities in other niches or segments. A great example is “destination travel” or “tourism,” where marketers seek to attract tourists to visit a specific location (Orlando, Chicago, San Francisco, Paris). Apparently, gay couples spend more on such trips than most other “market segments,” and therefore it can be profitable to allocate marketing dollars to target that audience. However, if the marketer chooses to exclude that niche (for whatever reason), there is a danger that other marketers will capture that niche, and earn more profits. Likewise, if 90% of the budget is spent on “gay tourism” then there is a risk not only of not “reaching” other potential visitors, but even of creating an impression that the destination is a “gay” or even “gay-only” destination, which might deter straight people from visiting.

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