Niche Marketing Versus Mass Marketing

Smaller firms are often able to sell niche markets which have been either overlooked or ignored by other firms. In this way, they are able to avoid competition in the short run at least. By targeting specific market segments, firms can focus on the needs of consumers in these segments. This can allow them to gain an advantage over firms targeting a wide market.

Picking the right market segment is important to achieving sufficiently large sales volume and profitably to survive and prosper as a company.

Picking the right market segment means that it is:

* measurable in quantitative terms.

* Substantial enough to generate planned sales volume.

* Accessible to one's company's distribution methods.

* sensitive to planned/affordable marketing spending events.

Other factors that could affect the company's success:

* strength of competitors to attract niche buyers away from one's products.

* similarity of competitive products in buyers minds.

* rate of new product introductions by competitors.

* ease of entry/protectability in the market for one's niche.

Distinct opportunities that are provided by niche marketing:

* by providing customers the product the way they prefer, value is added.

* by linking members of the specific product chain (eg. Cosmetics/perfumes) this added value is shared by all.

* by providing product to meet consumer needs, overall product consumption is increased.

* also provides producers with market access problems, a way to market their product in their particular geographical area.

Problems with Niche Marketing:

* Firms which manage successfully to exploit a niche market often attract competition. Niche markets, by their very nature, are small and are often unable to sustain two or more competing firms. Large businesses joining the market may benefit from economies scale which small firms are unable to achieve.

* Many small firms involved in niche marketing have just one product aimed at just one particular market. This does not allow a business to spread its risks in the way that a business producing goods might be able to.

* Since niche markets contain small numbers of consumers, they tend to be faced by bigger and more frequent swings in the consumer spending than larger markets. This may mean a rapid decline in sales, following an equally rapid growth of sales.

Why niche marketing is used:

* it is less expensive than mass marketing.

* it enjoys a higher sales "hit" ratio.

* helps individual to serve customers better by getting to know them.

* helps to focus one's advertising/marketing strategies.

* face fewer competitors when communicating to a well defined market.