Niche markets, mass markets and segmentation Edexcel International GCSE Business revision
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In plain words
No product suits everybody. A business has to decide who it is selling to: everyone, with one standard product, or a small group with special tastes.
To choose, it divides the market into groups of people who are alike. Each group is a segment.
5 things to know
- A mass market is the whole market for a product: very large sales of a standard product. Costs per unit are low, but competition is fierce and advertising is expensive.
- A niche market is a small, specialised part of a larger market. There is less competition and prices can be higher, but sales are small and the business depends on one group of customers.
- Market segmentation is dividing a market into groups of consumers with similar characteristics or needs.
- Ways to segment: by age, gender, income or socio-economic group, location, and lifestyle.
- Benefits of segmentation: products and promotion can be aimed at the people most likely to buy, so less of the marketing budget is wasted, and gaps in the market can be spotted.
Tips and tricks
- A successful niche attracts larger firms. Small sales protect a niche business only while the niche stays small.
- Recommend a way to segment that fits the product: age for toys, income for luxury cars, location for umbrellas.
It lands in your notebook with its questions as flashcards.
Niche markets, mass markets and segmentation: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
Which describes a mass market?
One product is sold to as many people as possible.
Which is an advantage of a niche market?
Few firms compete for a small, specialised group.
A sportswear firm makes one range for teenagers and another for people over 60. It is segmenting by
The groups are defined by how old the customers are.
Which is a benefit of market segmentation?
The message goes to the people most likely to buy.
Which is a risk of selling only to a niche market?
A small market leaves little room if tastes shift.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 8 marks. Write your answers on paper, then check them.
Niche markets, mass markets and segmentation
Edexcel International GCSE Business 4BS1 · 8 marks · papermunch.org
Name ______________________________ Date ______________
Define market segmentation.[2]
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Dividing a market into groups of consumers who have similar characteristics or needs.
Explain two benefits of niche marketing to a small business.[3]
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There is less competition, because large firms are not interested in a small market. Customers with special needs will pay a higher price for a product that meets them exactly.
Explain how segmenting the market by age could help a holiday company.[3]
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Different ages want different holidays. It can design products for each group, such as activity holidays for young adults and cruises for older people, and aim its advertising at each group where they will see it.
Answers: Niche markets, mass markets and segmentation
- 1. Dividing a market into groups of consumers who have similar characteristics or needs.
- 2. There is less competition, because large firms are not interested in a small market. Customers with special needs will pay a higher price for a product that meets them exactly.
- 3. Different ages want different holidays. It can design products for each group, such as activity holidays for young adults and cruises for older people, and aim its advertising at each group where they will see it.