In beginning any online endeavor, there is one thing that everyone must understand: every business is a niche - even the huge companies are.
Let's look at Wal-Mart (WMT) as an example. If you don't think they serve a niche, you'd be wrong. Look at how they attempted to compete with Target (TGT) in trendy clothing just recently. They not only got clobbered, but their share price went flat. They went outside of their target audience ... outside of their expertise ... and they floundered.
The reason I'm mentioning this is so you understand that serving a niche is done by every business. No business exists if they don't do it. In this case Wal-mart serves low price and Target - who is also a discounter - serves higher quality merchandise at a low price. Both of 
them are discounters that serve specific niches.
One thing that many people struggle with concerning narrowing down who you're going to sell to is that it gives an illusion of losing money; of not supplying what's needed; or limiting the potential of your business.
In fact the opposite is true. To not get specific is to not know why you're in business, which will destroy what you're attempting almost from the beginning.
So the first step in any business and comprehending niche marketing is to understand that you must narrow things down. The interesting thing that happens when you do it, is that once you reach the target audience you identify with, from there all sorts of ideas for products and services start to emerge to serve the people you'll serve. The idea that it's so narrow that it can't be profitably served begins to diminish as ideas continue to flow, now that you know who you serve and what they want.
Other Niche Marketing Resources:
Niche Marketing: Searching for a Profitable Niche
Niche Marketing: How to Define a Unique E-Business Niche
Niche Marketing vs Mass Marketing
Niche Marketing - How to Find Your Perfect Niche Market
Target Marketing Strategy – Find Your Own Niche Market
Niche Marketing - Find Your Niche!
Niche Marketing Considerations: Beef as a Case Example
Niche Marketing: Targeting the Best Prospects
The Two Faces of Niche Marketing
Niche Marketing - How to Find Your Perfect Niche Market
Niche Marketing: One-Page Wonders and Microsites
The Perfect "Niche Marketing" Example
Microsites and Niche Marketing
Why Niche Marketing is So Profitable
Make More Money Marketing to Niches!
Niche Marketing and Keyword Selection: it’s Search Marketing Heaven
Niche Marketing INTERNET INSIDERS SECRETS
Topple Barriers to Niche Marketing
Learn how to focus on a niche market
Steps to Finding Your Ideal Business Niche
NicheMarketResearch.com Articles
5 Biggest Niche Marketing Mistakes
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