Transcript Mass and Niche marketing

Mass V’s Niche Marketing
Unit 1:
Developing Business Ideas
Mass Marketing
Mass Marketing is the process of
devising products with mass appeal
and promoting them to all types of
customers.
The ultimate aim is to create a generic
brand e.g. Hoover or Coca-Cola
Coca-Cola aim their products at young
and old alike and they aim to be the
market leader.
Mass Marketing
When carried out successfully Mass
Marketing can be highly profitable.
Mass Marketing
Low Costs &
Higher
Profits
Which
leads to
Leads to
High Sales
Mass Production
Which
leads to
Niche Marketing
Niche Marketing is the process of tailoring a product to
a particular type of customer and market segment.
A niche involves identifying the needs of the consumers
that make up the niche. A specialised product or
service is then designed to meet the distinctive
needs of the consumer.
This limits the sales potential but makes the product
more attractive to those in the target market.
Niche marketers often distribute their products
through specialist retailers or direct to the
consumer, often through the Internet.
Niche Markets
Benefits


A premium price can be charged for highly differentiated products
which are valued by the target niche market
If first company to exploit a niche market then a loyal customer
base can be established

A niche market may grow to become a mass market e.g. Body Shop

Little or no competition (safe haven)

Products are not very price sensitive
Niche Markets
Drawbacks



The market may remain small
Successful niche firms may attract larger firms which will
take market share
Dependence on one product
Why Niche marketing firms fail

These firms have low cash flow and may expand too fast. They may
use the cash flow to buy fixed assets and have none left for paying
the short term bills.

Too little demand in the market

Too little market share for more than one company

Dependence on one product

Copy cat products may enter the niche market
How do Niche marketers survive?



Diversify early (offering more than one product). Operating
in different markets reduces the risk of failure in one
market finishing the business.
High prices may be able to be charged therefore increasing
revenues (premium prices)
Create a strong brand name early - this will aid
diversification
Case Study: Sausage Wars
Sausage Wars tells the story of how South-African-raised Bill
O'Hagan's passion for creating gourmet sausages became a
tale of business rivalry and intrigue.
Having set up a shop in Greenwich selling the type of gourmet
sausages he enjoyed back home, which were made to his own
special recipes, he enlisted the aid of two partners to help
meet demand.
The pair left to open their own rival company, selling sausages that
O'Hagan argued tasted remarkably similar to his own.
Watch the DVD and answer the following questions:
1.
2.
How did O’Hagan’s Niche marketing operation differ from
supermarket mass marketed sausages? (4 marks)
O’Hagans decision to operate a niche marketing strategy
ensured his success. To what extent do you agree with this
statement? (10 marks)