Unit 1 : Marketing and people - 1.3.1 Meeting customer needs

Edexcel International Advanced level Business Studies (2018) new syllabus Notes

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As edexcel has reviewed their specifications I have build up notes to cater the new specification topics I hope that you will find my blog to be useful

Firstly  I request all of you to download the specification and go through it as my notes would be tailored to each topic : International advanced level specification ( 2018)

Furthermore I request all of you to check out my post on exam preparation to gain an insight to what the examiner expects from you and how to tailor your answers to match the edexcel mark scheme

Unit 1 : marketing and people

1.3.1 Meeting customer needs 

a) Mass markets and Niche markets - characteristics, market size and market share, brands

Niche Market

Definition: A niche market is a small market targeted at a specific potion in a larger market often with specialist  or distinctive requirements.

The process of niche marketing involves
 a) Identifying the needs of consumers that make up a niche
 b) A specialist product or service is then designed to meet the distinctive needs of the consumers

Niches can charge higher prices as they cater to specialist requirements and are likely to be profitable businesses even in the short run.

They are also likely to face less competition as they would often cater to a unique product with low substitute producers and can establish a higher brand loyalty.

They sell through specialist retailers or via the Internet and often have a low sales volume and a lower share of the market.

However survival depends on the basis that they occupy a relatively unimportant low profit market niche so that mass market producers are happy to ignore the niche as they pose no threat.

Niches lack the advantage of Economies of scale and their costs of production is likely to be higher.
so entrepreneurs must know to manage their overheads with care if the company needs to operate above it's BEP.

Mass markets

Definition :  Mass marketing involves devising products with an appeal to the wider market as a whole and promoting them to all types of customers without segmenting the market.

Mass marketing has some common characteristics: 

a)  Everyone in the market is a customer of the product 

b) Amarket leader

c) And has an established generic brand

Mass marketing can be highly profitable as thy exploit economies of scale and achieve high volumes of scale.

Mass markets are likely have a long term survival as they can exploit economies of scale and achieve

high volumes of sales.

For example: Companies like Coca cola and Nike are well known mass market products with an established reputation for years

Competition in a mass market is likely to be higher as there are a multiple number of substitute producers offering similar products.

In conclusion: Niche market products are less price sensitive (inelastic) as they specifically cater to the needs of a consumer group in contrast mass market products are more price sensitive (elastic) as there are many alternatives available to consumers in the market so mass market companies must invest in research and development to differentiate products and create a competitive advantage to survive in highly competitive markets.

b) Dynamic markets : online retailing, How markets change, innovation and market growth, Adapting to change