Understanding "Niche" Marketing

Niche marketing is servicing a portion of a unique market,
or a unique portion of a common market, not already served.

Here, Unique Market can be in terms of a unique segment (based on demography, geography, psychography) - the product is not meant for the masses at all. But, because the market is considerably huge in size (i.e., total no. of customers), the nicher serves only a portion of this largely sized unique market.
Eg: The "luxury designer wear" market has a unique audience - so it is a unique market. But this market is huge and spreads throughout the world. As a nicher, I can open a small boutique in Ahmedabad and say, "I will design kurtas and designer sarees for Gujju women in Ahmedabad."
Since news channels are generally targeted to the masses, a nicher in this category can offer something unique to cater to specific needs of a smaller segment. Eg: a channel on Fashion news.

For the second part - Unique portion of a common market - an example can be Johnson & Johnson Baby soap that targets the 'baby' segment in the common soap market (which is mass).

For niche - 2 or more companies can offer the same products (eg: boutique) - but the individual customers should not be common between them. Eg: "A Gujju boutique with Bandhni designs" will still remain niche if another boutique "A modern khadi cloth design" opens in the city. But if another "Gujju Bandhini boutique" opens in the neighborhood- they dilute each other's "niche"status - and start competing with each other for "market leadership" again!

As can be seen in the above cartoon from www.CartoonStock.com, The first salesman has carved a niche for himself in the "garments" market as a "tie-seller". But the second salesman has entered the "tie" market as a nicher by catering specifically to the smaller segment within it - those who do not know how to tie a tie! Basically, both of them are niche players. But the customer segment of Salesman 2 would be a subset of the customer segment of Salesman 1.
Both of them are not competitors because one is offering a product and the other is offering a related service.

The basic purpose of 'carving a niche for yourself' is to get rid of competition.

The final point is that the status of being NICHE is not permanent, it is rather relative to the presence or absence of direct competitors.