A1 Types of Market
Types of markets are the classifications of customer groups that a business targets their goods and services towards. When creating a rationale for a marketing campaign, it is important to establish the type of market being targeted as this will influence a range of decisions.
Types of market include mass markets and niche market segments. Establishing the target market early is essential as it helps businesses invest in appropriate adaptations to their products, prices, promotions and place that appeal to their target market effectively and efficiently.
What are mass markets?
Mass markets are large groups of customers that share tastes, interests or characteristics. When targeting mass markets, firms can standardise their marketing mixes without needing to tailor them for different preferences.
Firms selling to mass markets usually aim to reach as many customers as possible so aim to keep product features generic and prices low. They tend to use mass production techniques, such as machinery and automation, to increase productivity and efficiency.
An example of a product aimed at mass markets is Kraft Singles cheese slices
What are niche markets?
Niche Markets are smaller segments of the population that share similar characteristics or interests. When targeting niche markets, firms will tailor their marketing mix to the preferences of individual segments.
Firms targeting niche markets are usually aiming to meet the specific needs of fewer customers which allows them to charge premium prices. They are likely to use production techniques that can be flexible to customer demand such as job or batch production.
An example of a product aimed at niche markets includes Daiya cheese.
| Mass Marketing | Niche Marketing | |
|---|---|---|
| Product | There is minimal customisations to individual preferences made to products as they are designed to appeal to very large numbers of people. | There are high levels of product customisations to meet specific needs of target segments. |
| Price | Price tends to be very competitive to attract a large number of customers and because there is likely to be many rivals. Economies of scale from higher levels of production can be passed onto customers through lower prices. | Premium prices can be charged due to the specialised features of the products meeting specific customer needs. It is also very unlikely that the organisation will benefit from economies of scale due to the small number of customers in the segment. |
| Promotion | Promotion is likely to involve above the line methods using mass media to reach a wide audience. | Promotion is likely to be more focused on directly reaching the customer segment. Social media advertising and influencers may be used that resonate with the customer group. |
| Place | Multi-level channels of distribution, using intermediaries such as wholesalers and retailers, are likely to be used to reach large numbers of customers by making it available in as many places as possible. | Retailers and online platforms will be carefully selected to reach the target segment based on where they are most likely to shop. |