12 Questions
What is the main focus of niche marketing?
Developing products for a small segment of a larger market
Why can small firms thrive in niche markets according to the text?
They can focus on the needs of just one customer group
What is a limitation of niche marketing as mentioned in the text?
Lack of economies of scale
In mass marketing, what is a significant advantage mentioned in the text?
Benefiting from economies of scale due to large production volume
Which factor makes firms likely to attract competition in niche markets according to the text?
Success and market dominance
Why do customers in niche markets tend to be willing to pay more for products?
For exclusive products tailored to their needs
What is market segmentation?
The process of dividing a market into groups based on characteristics
Why is market segmentation advantageous?
It makes marketing cost-effective by targeting specific segments
Why is it difficult to target niche markets?
Niche markets have a limited number of potential customers
What is a limitation of not being able to charge a higher price than the competition?
Inability to differentiate the product from competitors
How does product distribution differ based on market segmentation?
Different methods of promotion are used for each product segment
In which case would a company distribute products through popular retail stores?
When targeting health-conscious consumers
Study Notes
Niche Marketing
- Niche marketing involves targeting a small, specific segment of a larger market with tailored products
- Examples of niche markets include luxury brands like Versace and Clique perfumes, which cater to high-status consumers
- Advantages of niche marketing:
- Small firms can thrive in untapped niches, free from large firm competition
- Firms can charge premium prices due to exclusivity, yielding high profit margins
- Focus on a single customer group allows for targeted product development
- Limitations of niche marketing:
- Lack of economies of scale
- Risk of over-dependence on a single product or market
- Attraction of competition if successful
Mass Marketing
- Mass marketing involves selling the same product to the entire market without targeting specific groups
- Examples of mass marketing include the iPhone, which is sold uniformly across locations and income groups
- Advantages of mass marketing:
- Higher sales volumes compared to niche marketing
- Economies of scale reduce average costs
- Risks are spread across multiple markets
- Greater opportunities for business growth
- Limitations of mass marketing:
- Higher competition
- Inability to charge premium prices
Market Segmentation
- Market segmentation involves dividing a larger market into sub-groups based on shared characteristics and preferences
- Examples of market segmentation include PepsiCo's targeting of the health-conscious market with Diet Coke
- Bases for market segmentation:
- Socio-economic groups (income)
- Age
- Location
- Gender
- Lifestyle
- Product use (home/work/leisure/business)
- Advantages of market segmentation:
- Cost-effective marketing through targeted promotion and distribution
- Increased sales and profitability
- Opportunities for increased sales through tailored marketing
Learn about identifying and exploiting niche markets through examples like Versace and Clique perfumes. Discover how small firms can thrive in niche markets with advantages like high profit margins and exclusive products.
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