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.
Niche Marketing
| Pros? | Why? | Cons | Why? |
|---|---|---|---|
| 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 |
| Clear focus | 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. |
| Less competition | 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. |
Mass Marketing
| Pros? | Why? | Cons | Why? |
|---|---|---|---|
| Higher sales | 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. | More competition | 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. |
| Cost efficient | 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. |