Mass vs Niche Markets

Meeting Customer Needs: Mass Markets and Niche Markets

• Mass markets target a wide range of customers with their products.
• High potential sales volumes, economies of scale, and greater brand recognition are advantages of mass markets.
• Disadvantages of mass markets include high competition, difficulty in meeting specific customer needs, and high entry costs due to marketing and production scale.
• Niche markets focus on targeting a specific group of consumers.
• Advantages of niche markets include less competition, easier to meet specific needs, and potentially more loyal customers willing to pay premium prices.
• Disadvantages of niche markets include smaller target market limiting sales volume, higher unit costs, and riskier dependence on a narrow market.
• Market size refers to the total value or volume of sales in a market.
• Market share is the percentage of the total market held by one business or brand.
• Brands distinguish a product or service, adding value and encouraging customer loyalty through name, logo, and identity.

Dynamic Markets

• Dynamic markets are subject to frequent change due to consumer trends, technology, or competition.
• Online retailing involves selling goods and services via the internet.
• Advantages of online retailing include lower fixed costs than physical shops, 24/7 availability, and global reach.
• Disadvantages of online retailing include high competition, security and data protection concerns, and dependence on logistics and delivery systems.
• Markets change due to consumer preferences, income, technology, and legislation.
• Businesses must stay responsive to remain competitive in changing markets.
• Innovation and new products/services improve customer experience and meet emerging needs, fueling expansion and increased market share.
• Adapting to change requires monitoring external factors (PESTLE), investing in research and development, and using a flexible workforce and operations.

Competition and its Market Effects

• Competition offers customers more choices, better prices and value, and higher quality and innovation.
• For businesses, competition puts pressure on prices and profit margins, necessitates continual improvement, and encourages differentiation.

Risk vs Uncertainty

• Risk involves outcomes that can be estimated and planned for with known probabilities.
• Uncertainty involves events that are unpredictable and uncontrollable.
• Entrepreneurs and managers must make decisions in environments with both risk and uncertainty.
• Planning, insurance, and contingency strategies can reduce risk, but uncertainty remains a challenge.

Demand

Factors that lead to a change in demand:

• Substitutes: A price decrease in one leads to a demand drop in another.
• Complements: A price increase in one leads to reduced demand in the other.
• Normal goods exhibit demand increases with income.
• Inferior goods exhibit demand decreases as income rises.
• Fashions, tastes, and preferences are influenced by trends, culture, celebrities, and media.
• Marketing, advertising, and branding Promotions can increase awareness and perceived value, shifting demand.
• Demographics such as ageing population or shifts in family size can affect product demand.
• Examples of External Shocks include COVID-19, war and global crises and this can sharply change demand.
• Seasonality sees fluctuating demand throughout the year for seasonal products example Christmas decorations.

Supply

Factors that lead to a change in Supply:

• Higher costs result in lower supply and lower costs result in higher supply.
• Introduction of new technology increases efficiency leading to higher supply.
• Indirect Taxes increase costs leading to reduced supply.
• Government Subsidies lower production costs leading to increase supply.
• Supply chain issues or disasters affect External Shocks leading to decrease supply.

Markets: Demand and Supply Interaction

• The interaction of demand and supply determine the price and quantity of goods/services.
• Equilibrium Price: The point where demand equals supply.
• If demand rises, price, and quantity increase.
• If supply rises, price falls, and quantity increases.
• Market diagrams illustrate how shifts in demand/supply affect equilibrium.

Price Elasticity of Demand (PED)

• Price Elasticity of Demand (PED) measures responsiveness of quantity demanded to a change in price.
• PED = % change in QD / % change in Price is how to calculate this responsiveness
• Numerical PED values
  • 1 = Elastic (responsive)
  • <1 = Inelastic (less responsive)
  • =1 = Unitary
• PED is influenced by factors such as Substitutes, if the goods are a Necessity vs luxury, Time and Proportion of income
• Significance of this calculation includes, helping to decide pricing strategies
• Inelastic goods have increases in price which leads to more revenue
• Elastic goods have increases in price which leads to less revenue.
• As elasticity increases and price lowers, total revenue increases
• As elasticity decreases and price increases, total revenue increases

Income Elasticity of Demand (YED)

• Income Elasticity of Demand (YED) measures how demand changes with income.
• YED = % change in QD / % change in income is the formula used
• Numerical YED values determine types of goods
  • Normal Goods: YED > 0
  • Inferior Goods: YED < 0
  • Luxury Goods: YED > 1 Factors that Affect YED:
• Necessity or luxury status
• Economic cycle
• Consumer income levels
• Understanding if the goods are Necessity of Status goods and consumer income levels is of significance
• It is also useful to anticipate demand in a boom or recession and helps firms adjust product ranges and marketing.

Marketing Mix and Strategy: Marketing Objectives

• To increase product market share is an objective that improves competitiveness and market influence
• To increase revenue the company can increase product sales through new customers, product lines or pricing strategies
• To build a brand the company can promote strong brand recognition and customer loyalty
• Furthermore a company can allow premium pricing and emotional connection with their customer base
• Setting Objectives helps to provide direction and focus and makes success easier to evaluate.
• Disadvantages include, being too ambitious or unrealistic and difficulty to measure certain goals

Product Life Cycle

Product Life Cycle Stages includes:

• Development where there is High costs and no revenue
• Introduction where there is launch, slow growth and heavy promotion
• Growth, where there is rising product sales and profits that begin to materialize
• Maturity or Peak sales, saturated market saturation
• Decline or Falling sales and profits Extension Strategies could include:
• Product updates
• Repackaging
• Targeting new markets
• Promotional offers

The Boston Matrix classies based on market segments

• Stars: High market growth, high market share and the business should invest to maintain
• Cash Cows: Low growth, high share and the business should milk profits
• Question Marks: High growth, low share so the business has to analyse if it has potential or will drain
• Dogs: Low growth, low share so the business should consider divestment
• The purpose of Boston Matrix is to assist portfolio management and resource allocation

Marketing Mix (4Ps)

The business should consider the:

• Product such as Features, design, branding
• Price which is a pricing strategy such as skimming or penetration
• Place of Distribution channels
• Promotion which is Advertising, PR, sales promotion

Following this exercise the business should consider Marketing Strategies by Market Type:

• Mass Markets should be Standardised products and engage in Mass media advertising
• Niche Markets should make use of Customised offering and targeted advertising
• B2B (Business to Business) promotes building a Focus on relationship and value with a longer sales process
• B2C (Business to Consumer) emphasis being on brand and the emotional appeal of the product, online sales and promotions

Consumer Behaviour and Customer Loyalty

To promote Customer Loyalty Strategies the business should consider:

• Providing Consistent quality and service
• Implementing Loyalty schemes
• Creating Emotional branding
• Providing After-sales support
• Implementing Good communication
• To promote Product/Service Design the business needs Function - Product does what it should and Aesthetics ie appealing design and style

Product and Service Production

The business needs efficient and profitability to produce in terms of product Cost with due consideration of Social Trends:

• Waste Minimisation - Eco-friendly design
• Reusability/Recyclability - Sustainable products
• Ethical Sourcing - Fairtrade, local materials

Promotion and branding is essential and can include the following types of Promotion:

• Advertising ie TV/Online and PR and media
• Direct marketing
• Sales promotions
• Sponsorship

Types of Branding to consider include:

• Product branding
• Corporate branding
• Own-label branding
• Personal branding
• Strong Branding leads to additional Benefits that: adds Value, Justifies premium pricing and Reduces price elasticity of demand
• Steps for strong Brand Building include: USP/differentiation, Advertising, Sponsorship and Social media engagement
• Social Trends could make use of Viral marketing, Emotional storytelling and Influencer marketing

Pricing Strategies

• Businesses can determine their prices using the following methods:
  • Cost-plus which adds markup to cost
  • Skimming a high initial price
  • Penetration of low entry price
  • Predatory, deliberately undercut prices
  • Competitive prices based on rivals' prices
  • Psychological prices ending on £9.99 instead of £10
• These can be determined using a matrix which includes: USP/differentiation, PED, Competitor pricing, Brand strength, Lifecycle stage and Profit objectives
• Other points to add in price calculations: Online pricing and Price comparison websites

Distribution

Businesses can improve their routes to customer by utilising varying sales Channels to determine to optimum customer:

• Four-Stage: Producer - Wholesaler - Retailer - Consumer
• Three-Stage: Producer - Retailer - Consumer
• Two-Stage: Producer - Consumer
• Businesses can also make used on Modern Trends such as E-commerce, Direct to consumer (D2C), Omnichannel distribution and Click & collect

Managing People: Approaches to Staffing

• Staff as an Asset: Valued and supported, training and development prioritised
  • Higher motivation, better retention, improved customer service.
  • Can be costly and time-intensive.
• Staff as a Cost: Seen as a business expense emphasises minimising pay and benefits.
  • Reduces short term costs but lowers morale, results in higher turnover and potential for poor service
• The business can utlise a Flexible Workforce which includes: Multi-skilling, Part-time/Temporary, Zero-Hour Contracts and Outsourcing
• The company must approach Dismissal due to employee fault (e.g. misconduct) and Redundancy when a Job is no longer required (e.g. downsizing) with care

Employer and Employee Relationships

Businesses must navigate Employer and Employee Relationships and use can utilise the following:

• Individual Approach where one-to-one negotiation and Personalised however is inconsistent
• Collective Bargaining which goes Through unions or groups, ensures Consistency, collective power however has a Risk of disputes and loss of flexibility
• To recruit, there is Internal vs External Recruitment: Internal is cheaper, motivates staff but has a Limited talent pool and can cause internal conflict whereas External generates New ideas but is More expensive and time-consuming:

Staff Training

• There are inherent Costs of Recruitment and Training through Job ads, agency fees, interview time and training materials
• There are Types of Training to consider: Induction, On-the-Job and Off-the-Job

Organisational Design

• When Organisationalsing the bussiness should consider the organisational Structure Elements such as: Hierarchy, Chain of Command, Span of Control and Centralised vs Decentralised power structures
• These structures are of varying Types such as: Tall, Flat and Matrix
• Therefore one must consider Impact which will vary with structure and communication flow

Motivation in Theory and Practice is important due to the fact that it:

• Affects productivity, quality, absenteeism, and retention
• There are certain Motivation Theories that business should consider:
  • Taylor - Money as motivator
  • Mayo - Social needs and communication matter
  • Maslow - Hierarchy of needs
  • Herzberg - Hygiene vs motivators

Financial Methods

• Financial Methods for staff include: Piecework, Commission, Bonus, Profit Share, PRP
• Non-Financial Methods: Delegation, Consultation, Empowerment, Teamwork, Flexible Work, Job Enrichment, Rotation and Enlargement

Leadership

• Leadership vs Management
  • Leadership: Vision and inspiration
  • Management: Organisation and control Styles of leadership:
• Autocratic: Quick decisions, Low morale
• Paternalistic: Caring, but controlling
• Democratic: Involving, but Slower
• Laissez-faire: Independent, but has Risk of a lack of control
• Entrepreneur to Leader: Challenge, delegating, strategic thinking, managing people over doing everything

Entrepreneurs and Leaders

• An Entrepreneurs has the Role of Creating and Running a Business and must consider Intrapreneurship, Barriers, Risk vs Uncertainty
• In addition there are Entrepreneurial Motives and Characteristics such as: Risk-taking, resilience, creativity and confidence to achieve Financial and Non-Financial business objects
• Businesses Objectives should include: Survival, Profit Max, Sales Max, Market Share, Cost Efficiency, Employee Welfare, Customer Satisfaction and Social Goals
• Ultimately a business is one of Business Choices which considers Opportunity Cost and Trade-Offs to maintain market share