There is a lot of confusion about this, yes even among expert perfumistas in serious fragrance sites. Here are my two cents.
FIrst of all, it is very important to make clear that the concept niche, as in niche perfumery, applies to a whole brand of perfumes and not to a single perfume. Forget about your Marketing or Economics courses where you were told all about niche markets. While related to what you learned there, we are talking about something completely different, when referring to niche perfumery.
If the raison d'être of a company is to create perfumes, then it can be considered as a niche perfume company (brand). This means, the main purpose of said company's existence is the creation of perfumes.
Additional traits of niche brands is that normally, (1) they do not invest in massive marketing communication efforts. They also work with (2) exclusive distribution channels, contrary to mainstream brands. Many niche brands offer their products at a high (3) price (super duper high even). However, a niche brand does not have to be expensive, a good example is Smell Bent.
WHAT IS SO SPECIAL ABOUT NICHE PERFUMERY THEN?
Well, since their purpose is not to please everyone, follow the last trends and to be best sellers, the noses have creative freedom to invent whatever their heart tells them to. This is too, thanks to the fact that the target market of niche perfumery are true perfumistas: people who study, appreciate and see perfumery as an art, not only as an accessory, to "smell good" and whatnot. There are also those who look into niche brands to satisfy their urge to set themselves aside from the mainstream: the opportunity to be unique or feel that thei carry an über exclusive brand. Again, this does not refer to the need to wear a heavily priced fragrance but to the need to express one self's uniqueness.
NICHE BRAND + ADDED VALUE = EXHORBITANT PRICES?
Do not forget that price (of any given product) is a marketing variable. Price speaks directly directly to consumers, it communicates something about the brand and the product. Sometimes, the prices of some niche brands are very high, in order to keep the brand as something exclusive, not readily available (to everyone), worthy of the royalty and of the richest people on the world, for example. Other times, a niche brand's price talks directly about the quality of the ingredients used or sophisticated and complex processes of production. At times, the prices back up cruelty free philosophies and fair trade practices reflect on a niche brand's pricing strategy.
BUT BEING NICHE IS ALSO MARKETING...
Why, of course. It is very important to make clear that niche brands do make marketing communication efforts. They just do not make them massive, such as mainstream brands. Annick Goutal, Amouage, Acqua di Parma are all good examples of brands who have presence in cosmetic editorials of fashion magazines. Others, such as État Libre d'Orange do have some PR events. Let's not forget that, even though they can be considered to be art, niche perfumes are also luxury consumer goods!
AND WHAT DOES MAINSTREAM PERFUME BRAND REALLY MEAN?
Mainstream brands are simply brands that almost everyone knows and wears. They do invest in massive marketing communication efforts. Mainstream perfume brands can be classified in the following categories:
On one hand we have the fragrances of the fashion houses: Chanel, Dior, Dolce & Gabbana. And we also got the jewelry houses: Bvlgari, Cartier, Boucheron. Here, the common factor is that for these brands, their perfumes are one of many product lines that they manage. For example, Chanel's core business is to make fashion, clothing namely, but perfumes are that accessory that complete the consumers' experience and contribute to their engagement with the brand. Finally, we can find some brands in this category, such as Clinique, Benefit and Estée Lauder whose main business are cosmetic products, and perfumes are another of their product lines.
Another classification of mainstream brands are celebrity perfumes. The majority of these products are made by brands that do not fit into the niche definition, for they do invest in big marketing communication efforts in mass media. As you probably know, celebrity scents are perfumes developed by some company but their branding is built around some kind of celebrity. Word of caution, these perfumes are not only endorsed by someone famous, but their brand is the celebrity's name. For example the über popular Britney Spears perfumes which were developed by Elizabeth Arden. Wait... what?! Did you really think Britney was concocting her own fumes? Companies such as Parlux specialize in making this kind of scents, they work along with Paris Hilton and Jessica Simpson, for example.
Finally, we know that there are some brands that announce themselves in some magazines, even in TV or some point-of-purchase promotion. Perfume brands we can find at our local supermarkets and drugstores: they smell nice and they are quite affordable. Brands of this kind vary greatly from one country to another. The fact that they are inexpensive and readily available, does not make drugstore scents necessarily bad: do not make assumptions before sampling! Examples of this type of brands are Jovan, Adidas, Playboy, Myrurgia, Revlon, etc.
EXCEPTIONS TO THE RULE
Do consider that the ideas above are general guidelines and not strict definitions. There are some exceptions to the rule, when a brand can belong to more that one classification. And there are also those brands that have almost all the traits of a niche brand, except for one. And so on. Good examples are:
Who can deny that Guerlain existed from its origins to create beautiful perfumes only? They added their cosmetic and makeup lines later on. Their distribution channels are exclusive but not as exclusive and hard-to-get as other niche brands' channels. However, it is also true that they are not as available to the general public as other mainstream brands. Their high-end prices also make them less available to the masses. However, they do make quite large marketing communication efforts. But there is absolutely zero doubt that Guerlain is a niche brand.
Both are companies dedicated to the creation of perfumes. But, do see that their creations are quite mainstream: they are sold in many places, they prices are very affordable and yes, they do invest big time in marketing communication efforts. Their products are for the masses, they fit into current trends. Coty also develops perfumes for other mainstream brands, such as Adidas.
There is yet another category of perfumes, that some perfumistas mistake for niche. I am referring to those exclusive lines of some fashion houses. Again, perfume is a luxury item alright. But there are some people for whom regular luxury brands are not enough and of course they want something more exclusive and unique (of course, a lot more expensive). Awesome examples are Tom Ford's Private Blend, Hermessence by Hermès and Estée Lauder's Private Collection. These kind of lines are very similar to niche brands: high quality ingredients, creative freedom for the nose, they follow the niche perfumery trends, exclusive distribution channels and sky high prices.
I hope that I have helped you understand more about perfume brands and what their marketing departments are up to. I consider feedback and healthy discussion to be very enlightening so please do not refrain to give your personal thoughts!