4.3.2 Niche Markets

Global Niche

🔗 Where a business targets a specific segment of the global market with low sales volume and high prices.

• Less competition
• High prices
• Low sales volume
• Customer loyalty/brand loyalty -> PED inelastic
• Specific and unique

📝 Examples

• Luxury car brands (E.G Bentley, Rolls-Royce)
• Vespa (high-end scooter brand)
• Alpro (drinks for those who are lactose intolerant)

Cultural Diversity

• Vital to identify the different interests and values of people from different backgrounds
• Different values – Standards of behaviour (E.G Germany has a corruption problem)
• Language – The meaning of certain phrases and colours
• Different interests – E.G Indians and Americans go to the cinema 3-4 times more than Russians on average

Evaluation

• Cultural differences mean a brand may not always succeed (E.G Dominoes was successful in the UK but struggled in Switzerland)
• Far easier to be a global niche at the luxury end
• Due to different values and lifestyles, niche localisation may be needed to tweak the brand to suit the global niche

4Ps in Global Niche Markets

• Price – Typically high due to the high cost of raw materials and operations.
• Place – The atmosphere at the point of sale and the culture experienced by customers could be a deciding factor for a sale.
• Product – The quality of niche market products is typically high due to the low sales volume and reliance on customer retention from a small customer base.
• Promotion – Advertising a product extensively and in an innovative way increases exposure for a niche product and attracts more sales.
• Diversifies business product portfolio -> Increases the number of revenue streams -> Increases business' resilience to economic shocks without over-dependence on one product line
• Access to greater markets -> Consideration of ethics and cultures enables the business to enter more markets with sensitive consumers/governments (E.G China) -> Strengthens global reputation and develops competitive advantage over other firms

Different Approaches to Marketing

• Ethnocentric approach – Using what works in the home country as the strategy abroad E.G Pukka Pads.
• Geocentric approach – A mixture of using a similar strategy to the original whilst also adapting elements of the strategy to suit local needs. Where global brands are possible, but not in every circumstance. Delegation to locals to localise products E.G Coca Cola smaller cans in India.
• Polycentric approach – Local managers are empowered by the head office to adapt their products to local needs. E.G Chocolate formula is changed in most countries.

4Ps

• Price – Must consider income and taxes
• Promotion – Need to consider language barriers
• Place – Lifestyle may mean customers shop differently
• Product – Cultural and religious barriers must be considered