Can't say that I agree with everything he posts, but Seth Godin has a few things to say about niche businesses which address your question.
From his "An atomic theory of business size" post:
Want to go from freelance work as a
programmer to running a business like
Fog Creek Software? Totally different
list of requirements.
This is actually a good thing. It's
good because rightsizing allows you to
be profitable and live as a human.
(Posts like Make the world smaller would speak more exactly to the point, but it's relevant enough given that you're using a Fog Creek product here)
More often than not, small and focused companies are better able to adapt to the needs of specific user communities than larger companies - smaller companies are (or at least should be) closer to the right size to respond to their user communities without the needless delays which often accompany anything a "gorilla" company might attempt. (Remember, any ideas or requests fed into most any big company will need to travel through a Kafka-esque bureaucracy before they are translated into products or services ... the same cannot be said for a small and focused company - at least not for the ones which will be around a year from now)
The problems of offering "everything to everyone" (or leveraging legions of salespeople to convince everyone that your product is the right one for their needs - even if cheaper and more appropriate options exist) are parallel to the problems of offering a targeted service or product which fulfills the needs of a specific group of people or businesses.
Where a "gorilla" will attempt to dominate all markets, (often resulting in sales commission largess which, in turn, confers an inflated price) a small and focused company will attempt to be the best solution to a specific problem ... and because a small company can devote more of its energy to solving the domain-specific problems of a niche, the small and focused company usually offers a cheaper &/or better solution for that niche.
If your competition has high sales staff and advertising overhead, the strategy is pretty simple: make a product or service which (though it may not be able to shoe-horn every potential client's needs into its feature set) does one thing and does it well enough that it becomes a standard within the niche which it serves.