Niche Marketing: Where a business targets a smaller segment of a larger market, where customers have specific needs and wants.
Mass Marketing: Where a business sells into the largest part of the market, where there are many similar products offered by competitors.
|Profit margins often higher
|Lower sales required to cover costs
|Lack of economies of scale
|Demand will be relatively low, so manufacturing will have to happen in smaller batches
|Because they are targeting a niche market, they know exactly what customers want.
|If successful likely to attract competition
|Other businesses will be interested to expand their market share, because it would lead to greater income.
|A smaller market segment means less businesses will be competing for the custom.
|Vulnerable to market change
|Because the targeted market is so small, any small change could severely impact the revenue of the company.
|Customers tend to be more loyal
|Because you are tailoring your product or service to them specifically, customers will feel a closer bond.
|Risk of overdependence on a single market
|Targeting a niche market means that a very small group of people will be customers, so the company will be a lot more dependant on a few individuals.
|Larger market, more people looking to buy, more sales
|Can be difficult to meet all customer demands
|You’re targeting a large market segment, meaning that you’re making a one size fits all solution.
|Higher brand awareness
|More people are interested in the product, so more people will be aware of it
|Higher advertising costs
|More people need to see the advert because the market is larger, which means more money will need to be spent
|More potential customers
|A larger than niche market, so more people might want to buy the product.
|The market is bigger, and as there is more money to be made there will be more people trying to make money in the market.
|Economies of scale can be used so unit costs can be reduced.
|Less attractive to consumers
|Not focused on their needs specifically, so niche markets will be more likely to capture their interest if they exist for that customer.