Niche & Mass Marketing (Cambridge (CIE) O Level Business Studies)

Revision Note

Written by: Danielle Maguire

Reviewed by: Steve Vorster

In mass markets, products are aimed at broad market segments
- Mass marketing occurs when businesses sell their products to most of the available market
- Production usually happens on a large scale
- Products are generally standardised with little differentiation
- Kellogg's Corn Flakes is an example of a breakfast cereal brand aimed at the mass market

In niche markets, products are aimed at a small subset of the larger market, e.g. gluten-free products
- Niche marketing occurs when businesses identify and satisfy the demands of a small group of consumers within the wider market
- Production usually happens on a small scale
- Products may be made to order or produced with very specific customer needs in mind
- Bob’s Red Mill is well known for producing a variety of high quality gluten-free foods, including a range of breakfast cereals

Some niche markets become mass markets as large businesses start to realise the potential for growth
- E.g. Energy drinks started out as ‘niche products’ aimed at those engaging in fitness classes but as prices have fallen and more choice is available they have now become mass market products

Evaluating Mass Markets & Niche Markets

Market Type	Benefits	Drawbacks
Mass market	Low average costs due large scale production economies of scale Low prices lead to greater affordability and higher sales volumes The potential customer base is large Save money on marketing by using mass marketing channels to appeal to large volumes of customers E.g. TV Primark is an example of a clothing company that focuses its product on the mass market	Products are less unique as they are aimed at broad market segments Highly competitive markets that generally push down selling prices Low prices lead to lower profit margins
Niche market	Products are specialised and unique as they are aimed at narrow market segments Builds up specialist skill and knowledge, leading to a business having valuable market expertise High prices can allow businesses to earn a higher profit margin Louis Vuitton is an example of a fashion company that aims its products at a niche market	High average costs due to small scale production They do not benefit from economies of scale High prices make products less affordable and lead to low sales volumes Risk of over-dependence on a single product or market Likely to attract competition if successful

Last updated: 23 October 2024

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