Business Studies – 3.1.3 Mass markets and niche markets | e-Consult

The decision of whether to focus on a mass market or a niche market is a crucial strategic one for any business, and the optimal choice depends on various factors. There is no universally correct answer; both approaches have merit and drawbacks.

A mass market strategy is suitable for businesses offering standardised, affordable products with broad appeal, such as basic food items (e.g., bread, milk) or consumer electronics (e.g., smartphones). Economies of scale are a key advantage, allowing for competitive pricing and high volume sales. However, the intense competition and the need for substantial marketing investment are significant challenges. A business like Unilever, with its wide range of household products, exemplifies a mass market approach.

A niche market strategy is more appropriate when a business offers specialised products or services catering to a specific segment. This allows for greater customer loyalty, less intense competition, and the ability to charge premium prices. However, the smaller market size and the potential for limited growth are drawbacks. Examples include companies specialising in organic food, bespoke tailoring, or high-performance sports equipment. Tesla, initially focusing on electric sports cars, demonstrates a successful niche market strategy.

Ultimately, the best approach depends on the business's resources, capabilities, and the competitive landscape. Some businesses may even adopt a hybrid approach, targeting a primary niche market while also exploring opportunities in adjacent mass markets. The key is to understand the target audience and tailor the business strategy accordingly.