Niche & Mass Markets
Business Management: IB Diploma, topic 4.2.3
Niche vs. Mass Markets
Markets can be split into mass markets and niche markets. Their characteristics are different.
Mass market
- The mass market tries to make products and/or services for all consumers.
- The mass market will be larger and the types of products will be more generalised.
Niche market
- The niche market appeals to a much smaller segment.
- The niche market will be smaller than the mass market.
- The niche market provides products and/or services which focus on a specialist want or need.
Examples
- In the fast-food industry there are a few dominant players who appeal to the mass market - McDonalds, Burger King, Subway.
- There is a smaller niche market for healthy fast food. This is addressed by businesses such as Leon.
Benefits and disadvantages of mass markets
- Benefits:
- Having more customers.
- Benefitting from economies of scale (due to higher output levels).
- Can build a strong market presence.
- Disadvantages
- Higher levels of competition.
- Lower profit margins
Pros and cons of niche markets
- Pros:
- Less competition.
- Specific market.
- Can develop specific expertise.
- Higher profit margins.
- Customer loyalty.
- Cons:
- No economies of scale.
- Vulnerability because they have an undiverse product portfolio.
Test yourself on Niche & Mass Markets
What are the two types of markets?
Which market segment appeals to all types of consumers?
In which market is a business more likely to gain economies of scale?
In which market is a business more likely to have less competition?