Niche vs Mass Marketing
Advantages of Mass Marketing:
- Large range of potential customers
- Marketing economies of scale
- Profit margins may be low but profits are still high
- Products aimed at everyone so easier to market products
- Cash flow is steady and regular
Disadvantages of Mass Marketing:
- High profits will attract competitors to the market
- May be difficult to meet consumer needs because the market is so large
- May be difficult to notice changes in the market because of size, so may lose market share.
Niche vs Mass Marketing
Advantages of niche marketing:
- Ability to focus on consumer needs and wants and the ability to react quickly to changes.
- Marketing return is high because advertising is well targeted.
- Little competition so can charge high prices.
- Small firms can gain advantage by entering the market first
- Can gain high market share.
- Can gain customer loyalty
- Even better with a patent.
Disadvantages of niche marketing:
- Very specialised so Product Life Cycle could be very short
- Could attract larger firms
- Sales will be low which could be a problem if costs rise.
The Influence of the Internet
- Niche businesses can now operate globally because of the internet
- Niche markets are growing quickly.
- Market:Anywhere where buyers and sellers meet
- Can exist on the internet, emails, telephone lines
- Consumer markets:Where consumers interact with businesses
- E.g. Retail outlet
- Industrial market: Business organizations sell to other businesses
- Not to a final consumer
- Businesses use what they've bought to make other products
- Commodity markets: Buying and selling products from the primary sector of industry (HQ in MEDC, factories in LEDCs)
Factors that affect the amount that a firm should supply:
- Physical constraints
Factors influencing supply:
- Price that can be reached in the market place.
- State of the economy
- Physical constraints: Demand vs
How does market structure affect business?
Charecteristics of a highly competitive market:
- many firms with a small market share
- Price takers
- homogenous products
- low prices
- Firms have to accept market price.
- Keep up with new development
- Operate at minimum cost of production.
- When resources are distributed amongst uses that meets the requirement of the customer to the greatest possible extent
- Predatory pricing
- Control of suppliers
- Use of patents
The Long Tail
- Looks at niche strategy such as Amazon, that sell a large number of unique items in relatively small quantities
- Taking advantage of less popular products
- ITunes- electronic rather than physical storage space