Mass and Niche Markets

Introduction

• Mass and Niche Markets: Terms used to describe the type of market a business operates in.
• Key Difference:
  • Mass Market: Targets as many customers as possible.
  • Niche Market: Targets a very specific type of customer with clear wants and needs.

Features of Mass Markets

• Customer Targeting: Less specific, targeting various demographics (ages, genders, income, locations).
• Example: Nescafe Original, a mass market product aimed at all coffee drinkers.
• Key Features:
  • Mass production of high volumes.
  • Widespread availability in retailers and online, sold in many countries.
  • Mass media advertising through TV, radio, newspapers.

Advantages of Mass Markets

• Market Size: Large with high growth opportunities.
• Cost Efficiency: Economies of scale lead to lower prices.
• Widespread Availability: Higher chance of product discovery and repurchase.

Disadvantages of Mass Markets

• Profit Margins: Lower due to low prices and high competition.
• Product Variety: Standardized and uniform.
• Competition: High competition from many large companies.

Features of Niche Markets

• Customer Targeting: Focuses on a specific type of customer with specific needs.
• Example: Vivo Magic Ground Coffee with specific features like organic and fair trade.
• Key Features:
  • Smaller target group of customers.
  • Limited availability, often sold online.
  • Targeted media advertising.

Advantages of Niche Markets

• Profit Margins: Higher due to premium pricing for specific needs.
• Customer Loyalty: Unique brand leads to loyal customers.
• Competition: Less competition due to product uniqueness.

Disadvantages of Niche Markets

• Market Size: Smaller target market.
• Economies of Scale: Lower, leading to higher production costs.
• Availability: Limited, potentially reducing customer discovery.

Operating in Both Markets

• Strategy: Create products for both mass and niche markets.
• Example: Nescafe with mass market products and niche products like Dolce Gusto.
• Benefits: Reap advantages of both market types.
• Outcome: Nescafe becomes a leading coffee brand in the UK.

Conclusion

• Mass and niche markets offer distinct advantages and challenges.
• Companies can benefit by strategically operating in both markets.
• Nescafe is an example of successfully targeting both market types.