[Music] in this video we're going to take a look at Niche and mass marketing distinguishing between the two approaches and we're also going to try and have a sneaky peek at some of the advantages and limitations to each of these different strategies to understand the distinction between the two it's worth taking a look at our old friend Market segmentation and if you remember when we segment the market we take the total customers that we might reasonably expect to be purchasing this product and we try to break them down into different groups or subcategories depending on a a characteristic or a need that people might have so it may be that in a market males have different needs to females people of different age categories have different needs or tastes or wants from each other maybe people in different geographic regions need different things people in different socioeconomic groups might be looking for something slightly different from this product to each other and with mass marketing once we've completed that segmentation process we adopt a mass marketing strategy it means that we still try to launch products to Target all or most of those different market segments so if we were conducting some Market segmentation in the Cosmetics Market we might note that teenage Cosmetics customers have very different needs to those in their 20s to those who are middle age and those that are in older age categories if we adopt a mass marketing strategy it means that we I we recognize that customers of different ages do have different needs but we still want to Target all of them now that might mean that we need to offer a tweaked variant of our products to hit the needs of those different age groups but with mass marketing we're still trying to Target all of the categories that we've ident identified Niche marketing strategy is different it's where you segment the market and then decide to zero in to really focus on just one of those market segments so we might have segmented a market according to income for example let's imagine it's the clothing market and we've worked out that people in different socioeconomic groups have different needs and wants and desires when it comes to the purchasing of clothing now we recognize those different income groups and we recognize those different needs but rather than trying to launch ranges of clothing that appeal to all of those different groups with a niche marketing strategy we decide to zero in on just one and really try and cater for that need with the products that we develop so it might be that we decide to go with a niche marketing strategy just targeting people with clothing who are in very high socioeconomic groups and it might be that we can hit their needs with the products that we offer because we're just focusing in on that one group so let's start with Niche marketing we'll discuss some of the uh the advantages of it first of all and Advantage number one is to do with the competition that you might face in Niche markets and there's two things that we can perhaps say about that first of all in Niche markets you're likely to face less competition because Niche markets are smaller it draws less comp competitors into that Marketplace so you're not up against as many rivals but also the rivals that you are up against May well be smaller in stature because Niche markets are by Nature smaller than Mass markets they tend not to attract the larger organizations to compete in that market so that's two pluses especially if you're a smaller organization fewer competitors and the stature of those competitors may be smaller as well another advantage of the niche marketing strategy is because you are hitting customers needs exactly because you are really focusing on just one Niche and you can really learn about that consumer and understand their needs and really cater for their taste and their desires you might be able to add more value and charge a higher price for what you sell so that can be really advantageous because these are smaller markets but if you can command a higher price in that market then it just allows you an extra Avenue of creating Revenue perhaps another Advantage uh and this is going to sound like a strange Advantage uh because normally we associate High unit costs with something organizations aren't keen on something that's disadvantageous to them but in Niche markets because unit costs tend to be higher because firms are not operating on as large as scale because the markets are smaller the potential for the economies of scale are not as great because those unit costs are higher it tends to mean that firms aren't competing with each other on price so that lowers the barriers to entry in Niche markets it can be easier for smaller businesses to set up because often in Niche markets there isn't any firm that is a lowcost producer in that market which might make it easier for new entrance to join that market that's great for the new entrance and smaller organizations that are looking for a market that they can more easily set up in now if we talk about some of the downsides some of the limitations of our Niche marketing strategy obviously the first is the scope or the potential for growth so because Niche markets are really just about one category of customer one group that's been identified it's going to be a set number of people it's not going to be as large as the number of people that are in the market as a whole so the potential for growth there is not as great and as a linkage to that we can also say that the potential for higher profits are not as great either because there's not as many customers for you to Target for example rather than just being a mass producer of kitchen wear if you decide to zero in on the niche market of left-handed people who desire kitchen wear there is a finite number of those people and it's not anywhere near as great as the total size in that market so the potential for profits are lower and the final disadvantage we can perhaps talk about is that in Niche markets you are more vulnerable to any loss or reduction of custom so a loss of custom is never great to any organization but if you're in a mass Market you're naturally going to have more customers that that are trade with your business and you're going to have more potential customers that you can Target so if in a mass Market you were to lose 5% of your customers that is obviously not ideal but it might might be something that you can absorb something that you can cope with but in a niche market any reduction in custom can be very very critical for your organization because you don't have many customers to begin with so if you're operating in a niche market and you have a 5% drop in demand that could be enough to drive you out of the marketplace to make your business unsustainable so any loss in custom will be more fiercely felt when you're operating in a niche market now if we have a little look at Mass marketing strategies they have different benefits and advantages if we start with the benefits of mass marketing obviously the fact that these markets are bigger there's more people in them you've got more market segments that you're trying to Target means that you can potentially benefit from greater revenue streams so you're creating more sales more revenue for your organization because you're not just targeting One Market segment you've segmented the market and you're trying to offer something to all the segments you identified going hand inand with that is because you're operating on that larger scale it may be that you benefit from the greater economies of scale so just because in the clothing Market you've identified that males want something different to females you still might be able to purchase some of the materials you use to manufacture your clothing in Greater quantities imagine you're manufacturing jeans and males females want something slightly different to each other they want different styles and cuts but purchasing denim you can still do in bulk and benefit from economies of scale and then you can craft and create different styles of genes to Target those two different market segments with other Advantage we can say is it might be slightly easier to build up Greater brand awareness in Mass markets because there's more customers because there is more exposure and because we might be selling on a larger scale it might just make developing a brand awareness and a reputation for a certain aspect of marketing might just be easier to build that up in in the mass markets than it is in the less exposed Niche markets but if we tick off some of our downside of mass marketing we'll see you know it's not all giggles and tickles in there first of all the fixed costs in Mass markets can be higher so if you want to uh enter a mass Market there can be quite High startup costs if you are producing on larger scales and if you are trying to produce more standardized products it may mean that you're a very Capital intensive organization you've got to invest in lots of expensive Machinery or equipment or it and that obviously comes at a cost and so the fixed cost of your organization can be higher the break even outputs of your organization can be higher as well in kind of opposite to the niche markets we can also talk about competition in Mass markets and we can go for those two factors again but in Reverse this time so in the mass markets you're going to face a greater number of competitors because you're trying to Target more than one market segment so you've got more people more firms more organizations that are crowding out your Marketplace trying to saturate it and so there's more competitors in each of those markets but crucially the size of those competitors might be greater than in Niche markets as well so you're going going to be up against other Mass marketing organizations who are all scrapping for market share in this Mass Market that might be some very large very dominant players in this market that you are trying to compete with finally we could also say that maybe in those Mass markets there's less scope for charging higher prices and having greater added value because while you're producing maybe slightly more standardized and you're less likely to be really hitting the needs of the different market segments that you've identified you might not be able to charge as high a price as firms in a niche market can and so it might just reduce the amount of value that you can add on each of the products that you sell now there's absolutely no right or wrong strategy Niche and mass marketing strategies are both fine ways to go Niche marketing strategies tend to be more popular with smaller organizations because of the smaller startup costs and the lower barriers to entry those Mass markets are often populated by larger organizations who can afford the higher fixed Capital costs of penetrating those markets and can uh already start to benefit from those greater economies of scale by operating on a larger output one thing we should also say is that uh Niche markets can actually evolve into Mass markets if they start to develop a greater popularity so it may well be that uh perhaps a niche market of old like sugarfree products which might have started out as a niche market just targeting people like diabetics for example as people have uh have changed their thoughts their perceptions their values their opinions as people have become more health conscious as years have gone by that's a niche market that's taken on perhaps more of a mass marketing appeal and so a business that may have found itself in that niche market might find itself naturally evolving to Mass market organization so there you go difference between Niche and mass key thing to revise for the exam good to know some of our different advantages and disadvantages of each approach to marketing good luck with your revision we're going to put a link up there to some other marketing topics that may just Aid you as you're revising great luck to you in your exam we'll see you soon for some more tutorials