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Difference between niche & mass market
The difference between niche market and mass market (AO2)
Niche and mass markets are alternative approaches to marketing. Niche marketing is an approach that involves businesses focusing on a relatively small segment or a specific segment of the market. An example is minority sports (such as snowboarding or curling) within the larger sports market.
By contrast, mass marketing is an approach that involves businesses targeting all customers (all segments) in the market for a particular product. It focuses on selling standardized (homogeneous) products to the generic public or a large and broad group of customers.
"Any customer can have a car painted any colour that he wants, so long as it is black."
- Henry Ford (1863 - 1497), Founder of Ford Motor Company
Niche marketing is a specific marketing strategy or marketing approach that focuses on identifying and meeting the needs and wants of a small market segment. For example, the following are examples of niche market sports: Cliff diving, Curling, Drag racing, Horse riding, Korfball, Snowboarding, Synchronised Swimming, Ultimate Frisbee, and Wakeboarding.
Wakeboarding is a niche market sport
Businesses operating in niche markets supply highly specialised products to cater for a small and select target market. The target market is a clearly identifiable group of customers who have unique needs, tastes and preferences. It is usually a subset of a larger market. For example, the IB offers some niche subjects at Standard Level within the overall IB Diploma Programme. Examples of such subjects include:
Asian Arts
Astronomy
Brazilian Social Studies
Drama
Electronics
Fijian Studies
Food Science & Technology
Human Right
Marine Science
Nature of Science
Turkey in the 20th Century
World Arts & Cultures
World Religions
As the target market is clearly identifiable, firms operating in niche markets tend to have lower marketing costs as resources are more directed to the specific product to meet the demands of the targeted customers.
Niche markets often create business opportunities for small firms to compete with larger companies that may have an established customer base and large market share. Prices in niche markets tend to be relatively high because:
There is limited, if any, direct competition.
The lack of direct competition also means that customer loyalty is likely to be high. This is also because customer relationships tend to be stronger in niche markets.
The lack of substitutes mean that premium prices can be charged in order to gain high profit margins.
As markets are small and focused, there are few opportunities for economies of scale.
As a niche market specifically targets certain segments of a market, businesses can tailor-make their marketing to appeal to the intended audience. This helps businesses to avoid wasting time and money on marketing activities that are not relevant to the market segment.
ATL Activity 1 (Research and Thinking skills) - The niche market sports industry
Read the article here about 10 niche market sports – how many of these have you heard of, such as Octopush, Shinty, and Korfball?
Then read the article here about identify the main benefits of niche market opportunities.
Opportunities exist because of the nature of niche markets as firms focus on smaller and more specialized segments of a larger market by catering to the specific and unique preferences or demands of a particular group of consumers. Their products are not typically available in the mainstream market. Specialization can help firms to identify and target niche markets, leading to premium prices, higher sales revenues, and market growth.
Case Study 1 - Bald Dating
In late November 2020, a niche online dating app was launched exclusively for bald men. Bald Dating, as the name suggests, was designed for those specifically looking to find someone who wants to date bald men. The company's website states “Being bald can be very hard for some people and they lose their self-confidence... Bald Dating was created to show that being bald doesn’t matter. There are many people who don’t mind you being bald and there are even others who prefer it.”
However, Bald Dating isn't the first or only niche market dating app. It follows in the footsteps of other niche dating platforms such as Short King Dating, which caters for men who are under 5’9″ in height. The aim is to remove the stigma associated with height from the dating scene.
Bald Dating also follows the launch of 20 Dating in August 2020, an online dating site designed specifically for people looking for a significant age gap in their relationships. The service is dedicated explicitly to those seeking an age difference of 20 or more years between subscribers and their prospective partner. According to David Minns, the creative mind behind 20 Dating, said “Finding an 18 or 20 year old interested in a 40 year old on a ‘standard’ dating site could be a real challenge. At 20 Dating, you know everyone is open to a larger age gap.”
Case Study 2 - Pink Ladies
Pink Ladies – a niche marketing case study
Pink Ladies is a rather unique business. Whilst watching the news about a lady called Rachel Thacker who had been sexually attacked by an illegal taxi driver, Tina Dutton (co-founder of Pink Ladies) thought about her daughter Leanna who was at the age where she was going out in the city with friends. Leanna had told her mother that she felt rather anxious being the last person in a taxi after a night out with her friends. The comment made her mother Tina become aware of a niche market opportunity. This case study introduces the business model of Pink Ladies and highlights the potential successes of operating in niche markets with a clear and focused business strategy.
Pink Ladies – members only
Having carried out extensive market research to understand the risks faced by women in the UK, Tina Dutton and business partner Andrea Winders established Pink Ladies in June 2005. Pink Ladies is a members-only club providing a range of services, including pre booked car services, offering a guaranteed lady driver with safety for women being the paramount distinctive selling point. Other distinctive selling points of Pink Ladies are shown in Box 1. For example, the business only transports females, boys under the age of 12 and males with special needs.
Females can become Pink Ladies members from just £10 ($13.4). As a non-profit organization, members get discount vouchers worth £50 (approx. $67) upon successful registration. To further its corporate social responsibility (CSR) a donation to a local charity is given from membership fees.
Box 1 – The distinctive selling points of Pink Ladies
Uniformed female drivers
No cash in the cars (members use a pre-registered top-up service)
Available to registered members only
Through-the-door policy
In-car computers with built-in safety alarm
Vehicle tracking device
Pink vehicles!
Product differentiation – Pink style
Pink Ladies provides a ladies only transport service, with safety being the main focus. For example, all Pink Ladies vehicles are installed with the latest GPRS tracking and satellite navigation system. The cars are pink and so is the leather interior.
Passengers (females only) have to be members of the exclusive Pink Ladies Club. As the service is only available to authorised members, no cash is kept in the Pink Ladies vehicles. Instead, customers have a pre-registered account which they can top-up (in the same way as pay-as-you-go mobile phone services). This also helps to reduce any anxieties about not having enough money for a taxi after a good night out.
The drivers are also ladies only, who wear pink uniform (of course). They are trained in first aid, customer care (including being trained to work with disabled people) and, for ultimate safety, self-defence. Using GPS technology, Pink Ladies will send text messages to clients to tell them know when your car is nearby so that women do not have to leave the building and wait outside. It also means that members never have to queue in taxi lines. The GPS technology also allows Pink Ladies to track the speed of the cars, thereby acting as yet another safety device. Drivers deliver a through-the-door service, ensuring that their customers are safely inside before leaving. All vehicles have satellite navigation systems to ensure that drivers can get to their customers, however remote the location. All this serves to ensure peace of mind to the customer and the drivers.
More recently, Pink Ladies has allowed boys, under the age of twelve, to travel in their vehicles. This was in response to market research that revealed mothers who wanted to be transported with their children. Pink Ladies also offers a school drop-off and pick-up service for its members. In line with its private car hire service, Pink Ladies operates the school drop-off service using its through-to-door policy, whereby the driver will ensure that the child is with a member of staff from the school before leaving. It’s not just the children that members value the services for, as some clients use Pink Ladies for caring for and transporting their elderly parents. Not surprisingly then, many of its members use the service regularly including business women to use the Pink Ladies airport drop-off and pick-up service on a frequent basis.
Ultimately, these value-added services provided by Pink Ladies mean that members can have absolute confidence in the service.
Product portfolio – more than just a taxi service
Pink Ladies offers its members a host of services. In addition to its popular taxi service for pre-booking customers, Pink Ladies product portfolio includes:
Shopping vouchers and discounts
Car insurance (in association with Aviva)
Home insurance
Accident Management (on a no-win-no fee basis)
Legal services (including a free legal advice service for members)
Discount Holidays
Bingo!
Box 2 Pink Ladies top tips for a safe night out
• Plan ahead, and let others know your plans
• Try to stick to well-lit areas when on foot and, if walking home, be with friends
• Stay alert if alone
• Walk with an air of confidence
• Watch your drinks at all times (carry a drink spiking kit)
• Refer to the suggestions on www.2lovemylips.co.uk
Conclusions
The entrepreneurial talents of the founders of Pink Ladies demonstrate how a simple business idea can transform into a huge success with the market. The focus of the organisation is to provide value- added services to its members, in a lucrative niche market. Paramount to its success is a clear and focused business strategy: Pink Ladies wants to ensure that all members are safe when they are out, whether they are on their own or with their friends. It’s not just the customer that is given attention at Pink Ladies. The organization prides itself on the use of flexible working practices to suit its all-female staff. Pink Ladies actively encourages flexible shifts to attract and encourage women to seek employment opportunities at the organization.
Who would have thought that a teenage daughter expressing her concerns would have led to such a budding business?
Find out more about Pink Ladies here at www.pinkladies.co.uk
Bottled water is a mass market product
Businesses operating in mass markets supply goods and services to cater for large and undifferentiated target markets. Hence, mass marketing is the marketing strategy aimed at all customers in a market, without having split them into separate market segments as the business provides goods and services that appeal to wide-ranging groups of customers. For example, supermarkets typically sell a range of mass-market products, such as: bottled water, canned foods, wine, soft drinks (see infographic below), confectionery, toothpaste, and tissue paper. Any segment of the market can purchase these products, so there are no specific target markets.
Source: Statista
As the term suggests, "mass markets products" are standardized products, usually made using mass production techniques, to cater for large consumer markets. Hence, there are opportunities to have economies of scale, but the profit margin of each unit of output is relatively low. Similarly, there are cost savings per unit if businesses market their goods or services using above the line (ATL) promotional strategies to large and broad target audiences. By contrast, it is more economical for businesses to use below the line (BTL) promotional strategies for niche market products.
As mass market products are undifferentiated, firms use the same marketing mix to target all potential and existing customers. In some cases, the target markets may even include most of the population, such as bottled water, smartphones, and Internet services.
Mass marketing can lead to very high quantities of sales for a business. For example, according to its website, the Coca-Cola Company sells over 1.9 billion drinks each day (see ATL Activity 2 below).
Due to their large size and global presence, large firms operating in mass markets companies are likely to use above-the-line promotion, such as television advertising. Coca-Cola, for example, is a major sponsor of major sporting events such as the Olympic Games, NASCAR, the NBA, and the FIFA World Cup.
Quite often, niche market products become so popular that they evolve into mass market products. Examples of formerly niche market products that are now mass market products include mobile phones, flat screen televisions, and electric cars. However, the size of mass markets often means there is intense competition, which can harm sales, market share, and profit margins unless the business is able to establish brand loyalty and a unique selling point.
ATL Activity 2 (Thinking skills) - Where can(t) you buy a Coca-Cola?
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Coca-Cola is a mass market product and one of the world's most recognised brand names. Founded in 1886, the company originally sold Coca-Cola as a medicinal product. Today, the company sells 1.9 billion servings of the drink to mass markets across the world, every day.
Think of ten different places / distribution channels where customers can buy a Coca-Cola drink from.
Possible venues / distributors include:
Aeroplanes (commercial air flights)
Bowling alleys
Cinema / theatres
Convenience stores
Ferries / cruises
Football / sports stadium
Hotels (room service and mini-bar / fridge)
Restaurants, cafes, bars, and pubs
Secondary / High schools (some) and universities
Sports centres / Leisure parks
Supermarkets
Theme parks (amusement parks)
Train stations / long-distance train journeys
Vending machines
Business Management Toolkit - Porter's generic strategies (HL only)
Discuss how knowledge of Porter's generic strategies might help a business to decide between pursuing a niche or mass market approach.
You might find it useful to refer to Porter's generic strategies (HL only) before answering the above question.
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To test your understanding of this topic, have a go at these true or false questions.
| Statement | True or False? | |
| 1. | Niche marketing is an approach to marketing that aims to sell a good or service to a specific (focused) and narrow group of customers with very specific needs. | True |
| 2. | Above the line promotion is generally suitable for mass market products. | True |
| 3. | Mass market businesses can tailor-make their marketing to appeal to customers, thereby avoiding wasting time and money on marketing activities that are not relevant to customers. | False |
| 4. | By focusing on a specific market segment, businesses that focus on niche markets cannot earn high profit margins. | False |
| 5. | It is more economical for businesses to use below the line (BTL) promotional strategies for niche market products. | True |
| 6. | Over time, a niche market product can become more mainstream so becomes a mass market product. | True |
| 7. | Mass market products benefit from not having to have adapted marketing activities for different market segments. | True |
| 8. | In niche markets, the total number of customers is likely to be quite low. | True |
| 9. | Large multinational businesses often operate in niche markets. | False |
| 10. | By focusing on a small or narrow segment of the market, a niche market business is likely to attract the attention of larger, more established businesses. | False |
Teacher only boxTeachers can download a PDF version of this and use as a worksheet in class with their students.
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