Niche and Mass Marketing Strategies
We will discuss niche and mass marketing, distinguishing between the two approaches and some of each of these different strategies’ advantages and limitations.
Understand the distinction between the two; it’s worth taking a look at market segmentation. Segmenting the market is basically breaking the market down into different groups or subcategories, depending on a characteristic or in need that people might have. We take the total customers that we might reasonably expect to be purchasing this product.
Define Niche Marketing Strategies.
Niche marketing is an advertising strategy that focuses on a unique target market. Instead of marketing to everyone who could benefit from a product or service, this strategy focuses exclusively on one group, a niche market,or demographic of potential customers who would most benefit from the offerings.
For example, in any market, males have different needs for females; people of different age categories have different needs or tastes or wants from each other; people in different geographic regions need different things.
And again, people from different socioeconomic groups might be looking for something slightly different from these products to each other.
Mass Marketing Strategies
Mass marketing strategy it means targeting all or most of those different market segments.
Example of Mass Marketing
Example of mass marketing: When conducting a market segmentation in the cosmetics market, you might note that ,teenage customers have very different needs than those in their twenties or older age categories. In mass marketing strategy, It means that we recognize that customers of different ages do have different needs, but we still want to target all of them.
That might mean that we need to offer a tweaked variant of our products to fit the needs of those different age groups, but with mass marketing was still trying to target all of the categories that we’ve identified.
Advantages of Mass Marketing
Markets Are Bigger: the fact that these markets are bigger, there’s more people in them. There are market segments to target. You can potentially benefit from greater revenue streams, creating more sales, more revenue for the organization because they are not just targeting one market segment, have done segmented the market offering something to all.
Economies of scale: The segments identified going hand in hand with that is because operating on a most massive scale. It can benefit from the more significant economies of scale. For example, in the clothing market and have identified that males want something different to females, you still might purchase some of the materials you used to manufacture your clothing in greater quantities. Imagine your manufacturing jeans on males and females want something for a slightly different from each other.
They want different styles and cuts, but purchasing denim you can still do in bulk on benefit from economies of scale on. Then you can craft and create different styles of jeans to target those two different market segments.
Greater Brand Awareness: the other advantage is that it is slightly easier to build better brand awareness in mass markets because there’s more customers because there is more exposure on because we might be selling on the largest scale.
It makes developing brand awareness and a reputation for a certain marketing aspect easier than niche markets.
The disadvantage of Mass Marketing
High Cost: the fixed costs in mass markets can be higher. When entering a mass market, that can be relatively high startup costs. When producing on larger scales and producing more standardized products, it will be capital intensive organization. For example, investment in lots of expensive machinery or equipment or IT and your organization’s fixed costs can be higher.
High Break-even Output: The breakeven outputs of your organization can be higher as well, in kind of opposite to the niche markets.
High Competition: About competition in mass markets, you will face a more significant number of competitors because you’re trying to target more than one market segment.
There are people, more firms, more organizations that a crowding out your marketplace, trying to saturate it and more competitors in each of those markets.
Again, the size of these competitors might be more significant than in niche markets. Therefore, there will be mass marketing organizations that are all scrambling for market share in this mass market. Some vast, very dominant players in this market that you are trying to compete with.
Low Product Prices: Finally, in the mass markets, there’s less scope for charging higher prices or having more excellent added value because of more standardized products. There is less likelihood of hitting the different market segments’ needs and not charging as higher prices as firms in a niche market count. Therefore, it reduces the amount of value that you can put on each of the products that you sell, that there’s absolutely no right or wrong strategy.
Niche Marketing Strategies
It is where you segment the market and then decides to zero in to really focus on just one of those market segments.
Niche Marketing Examples
Example of niche Marketing is to have segmented the market according to income, different socioeconomic groups ,different needs and wants, and desires when it comes to purchasing.
We recognize those different income groups when we recognize there’s different needs but rather than trying to launch ranges of products that appeal to all of those different groups within a niche marketing strategy, we decide to zero in on just one and really trying cater for that need with the products that are developed.
We can decide to go with a niche marketing strategy, just targeting people with a very high socioeconomic group.
Advantages of niche marketing.
Niche marketing has Less competition: Business is likely to face less competition because niche markets are smaller. It draws fewer competitors into that marketplace and not many rivals. The rivals may well be smaller in stature because niche markets are, by nature, smaller compared to mass markets. They tend not to attract larger organizations to compete in that market. Fewer competitors on the stature of those competitors, maybe smaller as well.
Customer Needs Satisfaction: Another advantage of the niche marketing strategy is that it is likely to hit customers’ needs exactly because they are really focusing on just one niche. You can really learn about that consumer, understand their needs, and really cater to their tastes and desires.
Premium Price: You can be able to add more value to the product and charge a higher price for what you sell. That could be really advantageous because these are smaller markets. When you command a higher price in that market, it just allows you to create more revenue.
Low entry barrier: Another advantage of the niche marketing strategy is the low entry barrier.
In niche markets, there is a bit on economies of scale. The unit costs tend to be higher, and firms are operating on a larger scale, firms tend to mean that firms aren’t competing with each other on price. That lowers the barriers to entry in niche markets.
It could be easier for smaller businesses to set up because often in niche markets, there isn’t any for that is a lone-cost producer in that market, which might make it easier for new entrants to join that mark. That is good for the new entrance and smaller organizations looking for a market that they can more easily set up.
Disadvantages of Niche Marketing
Low potential for growth. Because niche markets are really just about one category of customers, one group that’s being identified it’swill be a set number of people is not going to be as large as the number of people in the market. The growth potential there is not as great.
Low potential for higher profits; that the potential for higher profits are not high either because there are not as many customers in the target market. For example, rather than just being a mass producer of kitchen where you decide to zero in on the niche market of left handed people who desire Kitchen.
Vulnerable to any loss or reduction of custom: The final disadvantage about is that the businesses are more vulnerable to any loss or reduction of customers. The loss of customers is never good for any organization. In a niche market, any reduction in customers can be very, very critical for your organization because you don’t have many customers, to begin with. A 5% drop in demand could be enough to drive you out of the marketplace to make your business sustainable.
As compared to a mass market, you’re naturally going to have more customers that trade with your business, and you’re going to have more potential customers that you could target.
Because of lower barriers to entry, more competition. Niche marketing strategies tend to be more popular with smaller organizations because of the smaller startup costs and lower entry barriers. Those mass markets are often populated by larger organizations that can afford the higher fixed capital. Costs of penetrating those markets on can already start to benefit from the greater economies of scale.