Business Studies – 3.1.3 Mass markets and niche markets | e-Consult
3.1.3 Mass markets and niche markets (1 questions)
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Advantages of targeting a niche market:
- Less competition: Fewer companies are likely to target the same specific group.
- Higher profit margins: Customers are often willing to pay a premium for specialised products or services.
- Stronger customer loyalty: Meeting specific needs fosters stronger relationships and repeat business.
- More effective marketing: Targeted marketing campaigns are more efficient and cost-effective.
Disadvantages of targeting a niche market:
- Smaller market size: The potential customer base is limited, restricting growth.
- Higher per-customer costs: Marketing and distribution costs can be higher relative to the number of customers.
- Vulnerability to changes in niche preferences: Shifts in customer tastes can significantly impact the business.
- Requires specialist knowledge: Understanding the niche market's needs requires in-depth knowledge and research.
Compared to a mass market, a niche market offers higher potential profitability but carries greater risk due to its limited size and vulnerability. A mass market offers greater volume potential but faces intense competition and lower profit margins. The choice depends on the business's resources, risk appetite, and strategic objectives.