4.3.2 - Niche markets

Question 1

What is a niche market

Answer 1

• A niche market is a small specialized market which caters for a particular product or service. E.g. Harley Davidson motorbikes, Rolex watches.

Question 2

What is cultural sensitivity

Answer 2

• Having cultural sensitivity, means understanding that people all over the world have different interests and values

Question 3

What are international business communications

Answer 3

Having a sensitivity to cultural diversity in communication is the key to smooth international business

Question 4

What are cultural differences

Answer 4

• The greeting rituals are very important in international business, getting it right can set the tone for the whole negotiation

Question 5

What is cultural diversity

Answer 5

• The phrase ‘Cultural Diversity’ means a range of different societies or people of different origins, religions and traditions all living and interacting together.

Question 6

What is a global niche market

Answer 6

• A global niche market is a very small market in each country, but the combination of all the countries together make enough demand to make the business profitable
• A global market niche is a subset of a global market
• A global market niche is highly specialised and is characterised by very loyal customers and premium prices
• If the business is selling in a niche then why not sell to this niche across the world and reduce the average costs and spread the fixed costs over more units sold

Question 7

What are the advantages of selling in a global market niche

Answer 7

• There is less competition and greater customer loyalty in niche markets.
• Prices are likely to be higher and therefore profits may be greater.
• Risk may be reduced
• Specialist products reduce PED and premium prices may be possible

Question 8

What are the disadvantages of working in a global market niche

Answer 8

• Some of the possible global economies of scale may not be achievable as each market will need individual attention
• Co-ordination and communications may be more difficult across differing brands and markets
• Some products may require unique ingredients or production techniques reducing the scope for economies of scale

Question 9

What are the 4 P’s in the marketing mix

Answer 9

• Product
• Price
• Place
• Promotion

Question 10

What is product in the marketing mix in relation to the global niche market

Answer 10

• Products that succeed in global markets are usually at the premium end of the market

Question 11

What is pricing strategy in the marketing mix in relation to the global niche market

Answer 11

• Global niche markets provide an opportunity for businesses to charge premium prices as the products tend to be more
  unique
• It depends on customer perception, as they will pay what they perceive the product to be worth not its actual value in terms of raw materials e.g. Rolex watch or Bugatti car

Question 12

What is place (distribution) in the marketing mix in relation to the global niche market

Answer 12

• Niche products can reach a global audience easily thorough websites
• Alternatively agents may be used in other countries apart from the host country e.g. Bentley showroom in Dubai which includes a VIP area

Question 13

What is promotion in the marketing mix in relation to the global niche market

Answer 13

• Promotion is just the communication aspect of the entire marketing function.
• In a global niche market the promotion may be more targeted and subtle than in a mass market
• The promotional message must be able to reach across cultures
• Brands have to be careful not to devalue the brand image by discounting