NICHE MARKETS Flashcards
What is niche marketing?
Niche Marketing = when a firm targets a small sun section of the mass market who have similar needs and characteristics. (Age, race, income, location)
What are some example niche products
Vans (Used by workmen (women) for usually work like plumbing, chippy, selling food)
Electric vehicles (Used mainly by people that are aware of their carbon footprint and want to help the planet)
Clothing that’s good for the carbon footprint (Green buyers that are aware of their carbon footprint)
What are some benefits of niche marketing
Better able to identify and meep customer needs
Product maybe unique = brand image/ USP
Fewer economies of scale available, so more opportunity for smaller firms to compete
Potential for charging higher prices
What are some costs to niche marketing
Lack of economies of scale, so higher production costs
Need to monitor changes in taste and fashion closely
High risk strategy - what is niche changes/ competition enters
Limited opportunity for market growth
What is economies of scope
Economies of scope: cost reductions that occur when companies increase production.
What is product proliferation
Product proliferation: allows a mass market firm to tailor its products to meet niche market needs.
Basically creating different models of a mass market product so that the organisation can benefit from both parts of the market. For example:
VW golfs - The product is a mass market product, lots of people need cars and lots of people like Golfs. So what VW have done, is they’ve made different variants of the Golf, you have the basic model, the more luxury model, or the GTR which is a sport model. VW have utilised product proliferation to be able to tailor their products to as many sub niches in a mass market.
What does product proliferation allow companies to do?
Economies of scale
Brand awareness (a lot of people in the market to see a brand)
More choice = high levels of consumer satisfaction
