Mass Marketing and Niche Marketing (Cambridge International AS Business)
Features of mass and niche markets
Mass markets
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In mass markets, products are aimed at broad market segments e.g. Kellogg's Cornflakes is an example of a breakfast cereal aimed at the mass market
- Market segments are groups of consumers who share similar characteristics e.g. age, lifestyle, etc.
- Mass marketing occurs when businesses sell their products to most of the available market
- Production usually happens on a large scale
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Products are less unique as they are aimed at broad market segments
- E.g. Primark is an example of a clothing company that focuses its product on the mass market
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Low average costs due large scale production **economies of scale **
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Low prices lead to greater affordability and higher sales volumes
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Low prices lead to** lower profit margins**
Niche markets
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In niche markets, products are aimed at a subset of the larger market, e.g. gluten free products
- Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market
- Production usually happens on a small scale
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Products are specialised and unique, as they are aimed at narrow market segments
- E.g. Louis Vuitton is an example of a fashion company that aims its products at a niche market
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High average costs due to small-scale production
- They do not benefit from economies of scale
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High prices make products less affordable and lead to lower sales volumes
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High prices can allow businesses to earn higher profit margins
Advantages and disadvantages of mass marketing and niche marketing
Mass marketing
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There is a range of advantages of selling to a wide audience with similar needs
- Reaching as many customers as possible using *standardised *products and promotional strategies can be very cost-effective.
- However, to stand out from the competition, businesses may need to spend heavily on promotional activity and price reductions
Evaluating mass marketing
| Advantages | Disadvantages |
|---|---|
| - Larger potential customer base - Selling to a broad audience means there are more people who might buy the product, increasing the chances of high sales and profits - Economies of scale - Producing and selling in large quantities reduces the cost per unit, making production more efficient and increasing profit margins - Stronger brand awareness - Mass promotion helps build a well-known and trusted brand that is recognised by many consumers - Simplified marketing - The same product and message can be used for all customers, reducing the cost and complexity of marketing | - High competition - Many businesses compete in mass markets, making it hard to stand out and keep customer attention - Less customer loyalty - General products may not fully meet individual needs, so customers might easily switch to competitors - Expensive marketing campaigns - Reaching large audiences through national TV, *billboards *or online ads can be very costly for businesses |
Niche marketing
- Focusing marketing activity on a smaller, clearly defined *segment *of the market means a business can meet the specific needs of a targeted group of customers, often with specialised products or services
- However, with fewer potential customers and higher unit costs, it can be difficult to make large profits in a niche market
Evaluating niche marketing
| Advantages | Disadvantages |
|---|---|
| - Less competition - Fewer businesses operate in niche markets, making it easier to attract and retain customers. - Stronger customer loyalty - Products are tailored to meet specific needs, helping to build closer and more loyal customer relationships. - Can charge higher prices - Niche customers are often willing to pay more for exclusive or specialised products - Clear brand identity - The business can focus its marketing on a specific audience, building a strong and easily recognisable brand | - Smaller customer base - Limited demand can reduce sales and make it harder to grow the business - Higher unit costs - Smaller-scale production usually means higher costs per item, reducing profit margins - Risk of market changes - If the niche becomes less popular or trends change, the business could lose most of its customers quickly |
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