Robin and Pat are planning to establish a sporting goods business. They have decided to adopt a niche market approach to maximise profits. (a) Outline ONE method that could be used by this business to collect relevant data about its target market. (b) Evaluate their decision to adopt a niche market approach.

Robin and Pat are planning to establish a sporting goods business - HSC - SSCE Business Studies - Question 25 - 2013 - Paper 1

Question 25

Robin and Pat are planning to establish a sporting goods business. They have decided to adopt a niche market approach to maximise profits. (a) Outline ONE method th... show full transcript

Worked Solution & Example Answer:Robin and Pat are planning to establish a sporting goods business - HSC - SSCE Business Studies - Question 25 - 2013 - Paper 1

Step 1

Outline ONE method that could be used by this business to collect relevant data about its target market.

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Answer

One effective method that Robin and Pat can use to collect relevant data about their target market is through a survey. Surveys allow businesses to gather primary data directly from potential customers. They can design questionnaires tailored to their specific market, focusing on questions related to customer preferences, buying behaviors, and attitudes toward different sporting goods. This method can yield valuable insights that can help them understand what their target market desires.

Step 2

Evaluate their decision to adopt a niche market approach.

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Answer

Evaluation of Niche Market Approach

Adopting a niche market approach presents both advantages and disadvantages for Robin and Pat’s sporting goods business.

Advantages

Reduced Competition: By focusing on a specific segment of the market, they can face less competition compared to larger companies that cater to broader audiences. This allows for targeted marketing strategies that can be more effective.
Customer Loyalty: A niche market often leads to a dedicated customer base that appreciates specialized products. If Robin and Pat can cater effectively to this market, they may foster strong customer loyalty.
Higher Profit Margins: Niche markets generally allow for higher pricing strategies since customers are often willing to pay more for unique or specialized products. This can enhance profitability significantly.

Disadvantages

Limited Customer Base: While focusing on a niche can be advantageous, it also limits the potential customer base. If the niche is too small, it may hinder growth opportunities.
Market Vulnerability: Relying on a specific segment means that any changes in market trends or consumer preferences can significantly impact the business. For instance, if a preferred sporting trend declines, it could lead to a loss in sales.
Resource Intensive: Developing specialized products can also be resource-intensive, requiring more time and investment in research and development to meet niche market demands.

Conclusion

In conclusion, while adopting a niche market approach can provide Robin and Pat with competitive advantages and the potential for higher profits, they must also be cautious of the inherent risks associated with limited markets and potential shifts in consumer preferences. Balancing these factors will be key to their success.