Tom decided to focus on selling in a niche market.
Evaluate the strengths and weaknesses of such a strategy. [20]
Knowledge 4, Application 4, Analysis 6, Evaluation 6
Always start with a definition.
Niche marketing is when you target a small, perhaps tiny
segment of the market. In this case Tom was targeting London commuters who
wanted a healthy breakfast. Kn & Ap
Strength paragraph:
One benefit of this approach is that Tom may be able to
charge premium prices. An The reason for this is
that his product is unique and there is no direct competition. The lack of
competition gives Tom ‘first mover advantage’ Kn
and the ability to set the prevailing price in this market. It would not be sensible to use penetration
pricing in such a market and charging a premium price is the obvious and
logical thing to do. An In addition, the fact
that the product is seen as being ‘healthy’ allows Tom to charge a high price.
People concerned about their diet are more likely to pay a premium for the
product in return for the health benefits it is said to bring. Ap & An Selling to commuters in locations like
Canary Wharf also allows the business to set high prices. This is because a lot
of people who work there earn above average salaries and can easily afford a
Moma breakfast. Ap & An All of these factors
are beneficial to the business. If the products are flavoursome and nicely
packaged there is no reason why Tom should not be able to sell a sizeable quantity
at each location. Ev As a result revenues will
be high allowing Tom to consider expanding the product range or introducing new
locations. An
In class we will consider a weakness paragraph
and a concluding paragraph for the evaluation marks.
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