the-nature-of-marketing mass-marketing-and-niche-marketing

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Features of mass and niche markets

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
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
Low average costs due large scale production economies of scale
Low prices lead to greater affordability and higher sales volumes
Low prices lead to lower profit margins

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
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
High average costs due to small-scale production
- They do not benefit from economies of scale
High prices make products less affordable and lead to lower sales volumes
High prices can allow businesses to earn higher profit margins

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

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

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

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

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

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