Theme 4 - 4.3.2 - Niche Markets

Question 1

What does niche mean ?

Answer 1

It is a subset of the main market which a specific product is focused

Question 2

Whats a niche market ?

Answer 2

A niche market is a small specialised market which caters for a particular product or service - e.g. Rolex watches, Harley Davidson motorbikes

Question 3

What is cultural sensitivity ?

Answer 3

It means having a understanding that people all over the world have different interests and values - cultures

Question 4

Whats international business communication ?

Answer 4

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

For example a business greeting in Japan would be a bow with different degrees meaning different things

Question 5

What are some diversity issues in the workplace ?

Answer 5

Sexism, ageism and discrimination

Question 6

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

So basically niche markets in one country is small but when you add up the niche markets in different counties then it adds up to a significant market

Question 7

Why do global niche markets have higher fixed costs than business in the mass market ?

Answer 7

So a niche market might need more specialist staff or might have very specialist manufacturing methods so fixed costs rate higher

Question 8

Why might a business competing in a niche market, start to sell globally ?

Answer 8

If a business is selling in a niche then why note sell this niche across the world and reduce the average costs and spread the fixed costs over more units sold

Question 9

What are the advantages and disadvantages of selling in a global niche markets ?

Answer 9

Advantages:
- There is less competition and greater customer loyalty in niche markets

• Prices are likely to be higher and therefore profits greater
• Risk may be reduced - as there is less competition
• Specialist products reduce PED and premium prices therefore may be possible

Disadvantages:
- Might not be achieving economies of scale like in a mass market as you might have slower manufacturing and more specialised that would cost more money and take time so less output and higher costs per unit which might mean less sales and less EOS

• Risks increased as smaller product portfolio and so a higher chance of it not succeeding
• Higher fixed costs
• Co-ordination and communications might be more difficult as the markets operate in different countries

Question 10

Whats the marketing mix in a global niche market ?

Answer 10

Product - They usually have a premium price such as super cars as they only appeal to a small subset of a country but many people buy them from lots of different counties

Pricing strategy: global niche markets allow business to charge premium prices as the products tent to have USPs

Place ( distribution ): niche products can reach a global audience easily through websites or can be sold at tours etc in different countries

Promotion: Niche markets would usually have less promotions as this could ruin their brand image - as a business such as Gucci doesn’t have promotions as this could make they seem less niche etc