3.1.3 Concepts of niche marketing and mass marketing
Niche marketing
Mass marketing
developing products for a small segment of the market
a business that specialises in supplying hand-tailored suits is part of the much larger market for men's clothing
selling same product to whole market
business that sells flour
Benefits and Limitations of NM
Benefits
Limitations
Small firms are able to survive and earn profit even in markets that are dominated by larger firms
Less competitions and won't waste scarce resources responding to competitor actions
Consumers will usually pay more for a high status, exclusive product. This offers firms the opportunity to charge high prices and high profit margins.
The small size of market means economies of scale are unlikely to be achieved. This means that unit costs are higher than they would be if the product was sold to a mass market
Small changes in consumer spending patterns could have a very significant impact on firms operating in niche markets.
Opportunities to earn high profits might attract competitors and this will reduce prices and future profits
Benefits and limitations of MM
Benefits
Limitations
Much larger market has the potential for high sales and profits
Changes in consumer spending patterns might have less effect on firms selling to a mass market. Reduces the risk to firms to operate in mass markets.
Requires large scale production. Larger firms often benefit from economies of scale which reduces unit costs
More competition which lowers prices and profit margins
Not all markets are large enough to support a MM approach
Consumers today are often looking for something slightly different from that offered by same product MM. This has led to greater division of the whole market and reduced the scope for MM.
Etsy.
What is Etsy?
How these make Etsy a good place for small businesses to use niche marketing
Uniqueness
Sense of community
e-commerce website focused on handmade or vintage items and craft supplies.
They allow independent artists to be synonymous with artisanal craftsmanship
Buyers get the same positive feeling about supporting local businesses and small artists
The sense of uniqueness makes it become a different e-commerce store compared to Ebay and Amazon, reducing competition from other markets
Everyone is not scared to share their experiences, and therefore will create a strong positive community around buyers, which will attract more customers