Mass V’s Niche Marketing

1. Mass V’s Niche Marketing Unit 1: Developing Business Ideas

2. Mass Marketing Mass Marketing is the process of devising products with mass appeal and promoting them to all types of customers. The ultimate aim is to create a generic brand e.g. Hoover or Coca-Cola Coca-Cola aim their products at young and old alike and they aim to be the market leader.

3. Leads to Which leads to Which leads to Mass Marketing When carried out successfully Mass Marketing can be highly profitable. Mass Marketing Low Costs & Higher Profits High Sales Mass Production

4. Niche Marketing Niche Marketing is the process of tailoring a product to a particular type of customer and market segment. A niche involves identifying the needs of the consumers that make up the niche. A specialised product or service is then designed to meet the distinctive needs of the consumer. This limits the sales potential but makes the product more attractive to those in the target market. Niche marketers often distribute their products through specialist retailers or direct to the consumer, often through the Internet.

5. Niche Markets Benefits • A premium price can be charged for highly differentiated products which are valued by the target niche market • If first company to exploit a niche market then a loyal customer base can be established • A niche market may grow to become a mass market e.g. Body Shop • Little or no competition (safe haven) • Products are not very price sensitive

6. Niche Markets Drawbacks • The market may remain small • Successful niche firms may attract larger firms which will take market share • Dependence on one product

7. Why Niche marketing firms fail • These firms have low cash flow and may expand too fast. They may use the cash flow to buy fixed assets and have none left for paying the short term bills. • Too little demand in the market • Too little market share for more than one company • Dependence on one product • Copy cat products may enter the niche market

8. How do Niche marketers survive? • Diversify early (offering more than one product). Operating in different markets reduces the risk of failure in one market finishing the business. • High prices may be able to be charged therefore increasing revenues (premium prices) • Create a strong brand name early - this will aid diversification

9. Case Study: Sausage Wars Sausage Wars tells the story of how South-African-raised Bill O'Hagan's passion for creating gourmet sausages became a tale of business rivalry and intrigue. Having set up a shop in Greenwich selling the type of gourmet sausages he enjoyed back home, which were made to his own special recipes, he enlisted the aid of two partners to help meet demand. The pair left to open their own rival company, selling sausages that O'Hagan argued tasted remarkably similar to his own. Watch the DVD and answer the following questions: • How did O’Hagan’s Niche marketing operation differ from supermarket mass marketed sausages? (4 marks) • O’Hagans decision to operate a niche marketing strategy ensured his success. To what extent do you agree with this statement? (10 marks)