Global Market NichesA2 Economics and Business

Unit 3

By Mrs Hilton for

Lesson Objectives

• To be able to explain how a company can identify a target market across countries that is much larger than a single domestic market

• To be able to discuss international trends and subcultures

• To be able to answer past paper questions based on the topic area

Starter – word wall • Match these 10 terms with definitions coming up on next slide..• Differentiated product• Market segment • Subculture• Direct Competition• Competitive advantage• Brand value• Substitute products• Brand perceptions• Subgroups• Market niche

Starter: Word wall – identify the correct term

A. A group of people who have interests in common

B. A smaller more specialised part of a global market

C. When a firm beats the competition

D. When a consumer can choose from a range of products that are all the same

E. A smaller group of people who all have a special interest in common

f. How much a customer thinks a brand is worth to them given what they know about it

g. What a customer thinks about a product or a company, how they view it

h. When one company is selling exactly the same thing as another company

i. When one product is not the same as all the other products in a market

j. A group of people who can be divided up by what they like or how old they are

Word wall answers

A Subculture

B Market niche

C Competitive advantage

D Substitute products

E Subgroups

F Brand value

G Brand perceptions

H Direct Competition

I Differentiated product

J Market segment

So what was the point of all that?

• If you are not sure what you are talking about then how will the examiner know?

• Are you speaking his language? Or are you stuck still using 20 words when 1 will do?

• Communicate with him/ her...so the can

• Give you better marks

Niche markets, subcultures, and shared values and perceptions

• Triumph Motorcycles:• http://www.triumph.co.uk/

• http://www.youtube.com/watch?v=GEO_9uc0j1o Quick clip

• Case Study

Gatorade

• http://www.youtube.com/watch?v=wNjQishYOy0 Video of advert

• In this country?• http://www.gatorade.com/ Website

• http://www.gatoradestore.co.uk/ The UK store

SubculturesSee Video at end

Why target a global market niche?

• All businesses have fixed costs, niche business the fixed costs are higher

• If the business is selling in a niche then why not sell to this niche across the world and reduce the average costs and spread the fixed costs over more units sold

Advantages of selling in a global market niche

• There is less competition and greater customer loyalty in niche markets.

• Prices are likely to be higher and therefore profits may be greater.

• Risk may be reduced• Specialist products reduce PED and premium

prices may be possible

Disadvantages of selling in a global market niche

• Some of the possible global economies of scale may not be achievable as each market will need individual attention

• Co-ordination and communications may be more difficult across differing brands and markets

• Some products may require unique ingredients or production techniques reducing the scope for economies of scale

Sample question 1

[10]

How marks are awarded for Q1 [10]

Level Mark awarded

1 1 Knowledge

2 2 Application

3 3-5 Analysis

4 6-10 Evaluation

Answer question 1• e.g. L’Oreal produces different products for different markets e.g. Lancome for

car driver, Maybelline for bike rider• e.g. each market segment has special requirements, the more precisely that

L’Oreal can target that market the more likely they are to sell. Specialist products reduce PED and premium prices may be possible, customer loyalty is increased and further products may be launched on their back

• e.g. Soft Sheen and Carson. A variety of markets spreads risk.• e.g. there are some drawbacks, some of the possible global economies of scale

may not be achievable as each market will need individual attention. Perhaps contrasted with the benefits of a true global marketing strategy. Co-ordination and communications may be more difficult across differing brands and markets.

• e.g. Some products may require unique ingredients or production techniques reducing the scope for economies of scale. Some brands are global but others will be specific to geographical or ethnic segments and require their own marketing and promotion

Sample question 2

[12]

How marks are awarded for Q2 [12]

Level Mark awarded

1 1-2 Knowledge

2 3-4 Application

3 5-7 Analysis

4 8-12 Evaluation

Answer question 2e.g. for understanding the nature of a global niche market and/or identifying possible benefits of connecting Gatorade to the characteristics of a global niche market. There is less competition and greater customer loyalty in niche markets. Prices are likely to be higher and therefore profits may be greater. Risk may be reducede.g. begins to discuss the possible drawbacks to operating in a global niche market. Economies of scale are limited and so whilst prices are higher so too are average costs. The need to perhaps develop different products/marketing strategies for each niche etc..e.g. there are several strands to the evaluation, other points could include the risks of changing tastes and fashions, becoming too successful and being swallowed up by bigger companies etc.

Revision Video – subcultures In Tokyo