4.3.2 - Niche Markets

Question 1

What is a niche market?

Answer 1

a small specialised market which caters for a particular product or service

Question 2

Cultural Diversity

Answer 2

a range of different societies or people of different origins, religions and traditions all living and interacting together

Question 3

Cultural Sensitivity

Answer 3

understanding that people all over the world have different interests and values

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

Question 5

What is a global niche market

Answer 5

• 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

Question 6

Why a Global Niche Market?

Answer 6

• All businesses have fixed costs, in a niche business the fixed costs are higher
• 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

Benefits of Global Niche markets?

Answer 7

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

Disadvantages of Global Niche Markets?

Answer 8

•economies of scale achieved in mass market may not be achievable in niche as each market will need individual attention
• Co-ordinationand 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
• Higher fixed costs

Question 9

4P’s of Global Niche Market

Answer 9

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

Price - Global niche markets provide an opportunity for businesses to charge premium prices as the products tend to be more unique

Place - Websites or using salesman acting on behalf of the company e.g Bentley Dubai

Promotion - A global niche market the promotion may be more targeted and subtle than in a mass market