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Niche and Mass Markets

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Business Studies

When it comes to certain products, like dishwasher tablets or toilet paper, there is not much differentiation between various brands. This is because the companies that produce such products want to target as many customers as they can and create a universal appeal. Therefore they create a product and standardise it to reach a large customer segment. But what happens when a company wants to target only a small subsegment of consumers? Let's find out.

Characteristics of niche and mass markets

Most markets are made up of one dominant market segment, and a couple of smaller segments. The dominant segment is known as the mass market, whereas smaller segments are known as niche markets.

Niche market

A niche market is a smaller segment of a larger market. In niche markets, customers tend to have very specific wants and needs.

Niche marketing involves outlining and understanding the needs and wants of customers in the small (niche) market segment. Niche segments are usually created by identifying needs and wants that are not addressed by the mass market or by other businesses.

Niche segments tend to be small; the number of consumers and the quantity (volume) of products or services consumed tend to be lower. The type of products or services niche market consumers demand is usually very specialised, distinct, or unique. Due to this specialisation, the price of niche market products and services tend to be quite high, or at least higher than mass-market products. Niche producers tend to sell their products online or through individual retailers.

Mass market

The mass market is a large part of the market. It includes a general and broad consumer segment.

Mass marketing is a strategy in which businesses decide to target an entire market with their product or service. It is a type of strategy in which a business sells to the largest part of the market.

Mass marketing tends to ignore the differences between consumer segments. Instead, it sells to everyone. Products or services tend to be quite standardised and hold universal appeal. The idea behind mass marketing is for everyone to be a user of the product. Mass marketing aims to reach as many consumers as possible.

A mass market involves a lot of different product options for consumers. Customer needs in this type of market tend to be less specific. Products tend to be quite similar (they are not particularly differentiated).

Generic brands appear as a result of mass marketing.

A generic brand is a product without a universally recognised brand name or logo.

These types of products are usually not advertised. Sometimes generic brands are synonymous with a product, meaning consumers treat the brand name as if it were the product.

Bubble Wrap, or Hoover.

Examples of niche and mass marketing

There are many different niche and mass market brands you have probably heard of. The following section will outline an example of each.

Niche marketing example

One example of a company targeting a niche market is the e-commerce store Lefty's. They are an online business that targets left-handed people by selling specific products tailored to left-handed use. They have segmented their customers based on whether they are left-handed or not, and have created a niche segment by identifying a gap in the market.

The needs and wants of certain left-handed consumers were not being met by other businesses. As a result, they have come up with unique and specialised products (like oven mitts, office supplies, and gardening tools), that are made specifically for left-handed consumers, to address this gap in the market. The business has created a niche segment for its products.

Mass marketing example

An example of a mass-market product would be washing up liquid. A popular brand of washing up liquid is Fairy, which is manufactured and owned by consumer good giant Procter & Gamble. Fairy's product range is quite small. The washing up liquid is most widely available in the original (green bottle) version and the lemon-scented (yellow bottle) version. You have most likely encountered Fairy washing up liquid in your kitchen or your friend's kitchen, as it is by far the leading brand of washing up liquid in the UK. This is because it is a mass-market product. The product is very standardised and it has universal appeal. It is bottled in simple packaging and is relatively cheap.

Fairy is marketed through a mass-market strategy. The advertising campaigns used by the brand tend to have universal appeal due to their simplicity. The ads are simple, straightforward, and generic. This generic characteristic is what you will most likely achieve when marketing to a mass market.

Advantages and disadvantages of mass and niche marketing

There are several benefits and downsides to both mass and niche marketing.

Advantages of mass marketing

  • Benefits of large-scale production (economies of scale).

  • The potential to minimise unit costs.

  • Large-scale capacity - do not have to face supply issues.

  • Large customer base and customer reach.

  • The universal appeal of generic products (no need to heavily differentiate).

  • Customers' wants and needs tend to be general.

Advantages of niche marketing

  • Less competition, as not many firms offer the specialised product or service.

  • Clear objectives and aims to reach the specific target segment.

  • Customers could be easier to find and reach.

  • The company gains market expertise due to the specialised skill set required to manufacture the product or operate the service.

  • Can often charge a higher price and benefit from higher profit margins.

  • More loyal customers as limited options exist.

Disadvantages of mass marketing

  • The market is more competitive.

  • It can be hard to persuade consumers of the superiority of the product due to the lack of differentiation.

  • High brand switching, as it does not make too much of a difference to customers which brand they purchase.

  • You need to keep up with competitors' prices and changes, as demand can be sensitive. For example, if a competitor lowers the price of their product, consumers will likely purchase the competitor's cheaper product as opposed to yours.

  • A lot of similar products are available to customers on the market.

  • Consumer segments could be too broad to properly target customers.

Disadvantages of niche marketing

  • No economies of scale (low-scale production).

  • Higher unit costs.

  • Could attract competition if the product or service is successful.

  • The company could become too reliant on the production of a single product. This could lead to long term inefficiencies.

  • Sensitive to market changes.

Niche and Mass Markets - Key takeaways

  • A niche market is a smaller segment of a larger market. In niche markets, customers tend to have very specific wants and needs.
  • Niche marketing involves outlining and understanding the needs and wants of customers in the small (niche) market segment. Niche segments are usually created by identifying needs and wants that are not addressed by the mass market or by other businesses.
  • The mass market is a large part of the market. It includes a general and broad consumer segment.
  • Mass marketing is a strategy in which businesses decide to target an entire market with their product or service.
  • Mass market products or services tend to be quite standardised and hold universal appeal.
  • There are several advantages and disadvantages to both niche and mass marketing.

Niche and Mass Markets

Mass marketing is a strategy in which businesses decide to target an entire market with their product or service. Mass marketing is where a business sells to the largest part of the market. A mass market involves a lot of different product options for consumers. Customer needs in this type of market tend to be less specific. Niche marketing involves outlining and understanding the needs and wants of customers in the small (niche) market segment. Niche segments are usually created by identifying needs and wants that are not addressed by the mass market or by other businesses. 

Mass markets cater towards an entire market, whereas niche markets target a small subsection of consumers in a market. Niche markets target a specific consumer segment with specialised, unique wants and needs. Mass markets target the entire market and do not focus on specific subsegments of a market. Mass market products and services tend to be generic and widely available, whereas niche market products are more specialised.

Final Niche and Mass Markets Quiz

Question

What is mass marketing?

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Answer

Mass marketing is a strategy in which businesses decide to target an entire market with their product or service. Mass marketing is where a business sells to the largest part of the market. A mass market involves a lot of different product options for consumers. Customer needs in this type of market tend to be less specific.

Show question

Question

What is niche marketing?


Show answer

Answer

Niche marketing involves outlining and understanding the needs and wants of customers in the small (niche) market segment. Niche segments are usually created by identifying needs and wants that are not addressed by the mass market or by other businesses.

Show question

Question

What is a generic brand?


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Answer

Generic brands appear as a result of mass marketing. A generic brand is a product without a universally recognised brand name or logo. These types of products are usually not advertised. Sometimes generic brands are synonymous with a product, meaning consumers treat the brand name as if it were the product.

Show question

Question

What is an example of a generic brand?


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Answer

  • Kleenex 

  • Chapstick 

  • Bubble wrap 

  • Jacuzzi 

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Question

Which of the following statements is correct? 


I. Mass marketing tends to ignore the differences between consumer segments. 

II. The aim of mass marketing is to reach as many consumers as possible

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Answer

Both statements are correct.

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Question

Which of the following statements is not correct regarding mass marketing?


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Answer

The idea behind mass marketing is for a small customer subgroup to purchase generic products.


Show question

Question

Which of the following statements is not correct regarding niche marketing?


Show answer

Answer

The price of niche market products tends to be relatively low.

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Question

Name two advantages of mass marketing.


Show answer

Answer

  • Benefits of large-scale production (economies of scale). 

  • The potential to minimise unit costs. 

Show question

Question

Name two disadvantages of mass marketing. 


Show answer

Answer

  • The market is more competitive.
  • It can be hard to persuade consumers of the superiority of the product due to the lack of differentiation.

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Question

Name two advantages of niche marketing. 


Show answer

Answer

  • Customers could be easier to find and reach.
  • The company gains market expertise due to the specialised skill set required to manufacture the product or operate the service. 
  • More loyal customers as limited options exist.

Show question

Question

Name two disadvantages of niche marketing.

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Answer

  • Higher unit costs.

  • Could attract competition if the product or service is successful.

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Question

Which of the following is an advantage of mass marketing?

  1. Economies of scale 

  2. Easier to find and reach customers 

  3. Higher customer loyalty 

  4. Increased market expertise 

Show answer

Answer

A.

Show question

Question

Which of the following is an advantage of niche marketing?

  1. Economies of scale 

  2. Higher customer loyalty 

  3. Higher unit cost 

  4. Lack of differentiation 

Show answer

Answer

B.

Show question

Question

Which of the following is a disadvantage of mass marketing?

  1. Lower unit costs

  2. Economies of scale 

  3. Specialized skills 

  4. Lower customer loyalty 

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Answer

D.

Show question

Question

Which of the following is a disadvantage of niche marketing?

  1. Easier to reach customers 

  2. Lower customer loyalty 

  3. The market is more competitive

  4. Higher unit costs of production

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Answer

D.

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Question

A company who wants to target a small subsegment of consumers can be regarded as a ............

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Answer

Niche brand

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Question

........ is a small segment of a larger market

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Answer

Niche

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Question

The following are characteristics of a niche markets 

a. Low number of consumers

b. Low quantity of products

c. High prices

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Answer

True

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Question

Niche market tends to ..... and mass market tends to .......

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Answer

Small and Large

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A strategy that targets an entire market is known as ....

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Answer

Mass marketing 

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....... is as a result of mass marketing

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Answer

Generic brand

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Question

Economies of scale is an advantage of mass market 

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Answer

True

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Question

One of the following is not an advantage of mass marketing

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Answer

a. Potential of cost minimisation 

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Niche markets are at disadvantage because of all except 

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Answer

a. Low-scale production

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....... leads to high prices 

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Answer

Specialisation in Niche market

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........ aims to satisfy all market segments

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Answer

a. Mass marketing 

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Question

..... is created based on mass markets inability to address the needs and wants of consumers

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Answer

Niche market

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Question

A major characteristics of mass market is a wide option of products

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Answer

True

Show question

Question

A common feature and disadvantage of mass markets os product similarity 

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Answer

True

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