Lecture Notes: Niche vs. Mass Marketing

Introduction

• Focus: Distinguishing between niche and mass marketing.
• Explore advantages and limitations of each strategy.

Market Segmentation

• Definition: Dividing potential customers into groups based on characteristics or needs.
• Examples: Age, gender, geographic location, socioeconomic status.

Mass Marketing

• Strategy: Aims to target all or most market segments.
• Example: Cosmetics market targeting teenagers, 20s, middle age, older age.
• Product Variance: Products may need tweaks for different segments but aim to cover all.

Advantages

• Larger potential revenue streams by targeting multiple segments.
• Economies of Scale: Benefit from bulk purchasing (e.g., materials for clothing).
• Easier to build brand awareness due to larger market exposure.

Disadvantages

• High Fixed Costs: Capital intensive, higher startup costs.
• More competitors, with potentially larger organizations.
• Less flexibility in pricing and value addition due to standardized products.

Niche Marketing

• Strategy: Focuses on one specific market segment.
• Example: Clothing market targeting high socioeconomic groups.

Advantages

• Less Competition: Smaller markets attract fewer, smaller competitors.
• Ability to charge higher prices by meeting specific customer needs.
• Lower barriers to entry due to less price competition.

Disadvantages

• Limited growth potential due to smaller customer base.
• Vulnerability to customer loss; a small drop can severely impact.

Evolution of Markets

• Niche markets can evolve into mass markets (e.g., sugar-free products gaining broader appeal).

Conclusion

• No absolute right or wrong strategy.
• Niche marketing suits smaller organizations, while mass marketing is for larger entities.
• Important to understand advantages and disadvantages for exam preparation.