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Explain the term niche market with reference to Fantasia Clothing Ltd - Leaving Cert Business - Question 7(A) - 2017
Question 7(A)
Explain the term niche market with reference to Fantasia Clothing Ltd. Illustrate the implications for a business operating in a niche market.
Worked Solution & Example Answer:Explain the term niche market with reference to Fantasia Clothing Ltd - Leaving Cert Business - Question 7(A) - 2017
Step 1
Explain the term niche market with reference to Fantasia Clothing Ltd.
Answer
A niche market refers to a small, specific segment of a larger market that caters to a distinct group of customers with particular needs. In the context of Fantasia Clothing Ltd., this means that the company targets a specific segment of the children's clothing market, focusing on bright, colorful, and uniquely designed apparel. These products are not mass-produced; rather, they are tailored to meet the preferences of children and their parents who seek high-quality, visually engaging clothing. By catering to this niche, Fantasia Clothing Ltd. avoids competition with larger, generic clothing brands that focus more broadly on the overall children's market.
Step 2
Illustrate the implications for a business operating in a niche market.
Answer
Operating in a niche market entails several implications:
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Little or No Competition: Companies in niche markets often encounter less competition, as they serve specific needs that larger companies may overlook. This can provide a more stable business environment for niche marketers.
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Less Investment Required: Niche businesses may require lower initial investments due to the limited scale of operations and focused product lines.
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High Cost Base: However, creating specialized products can involve higher costs for materials and skilled labor, which may lead to higher prices for consumers.
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Brand Loyalty: Building brand loyalty is crucial for niche businesses. Established relationships with customers can lead to repeat business and recommendations, enhancing market presence.
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High Margins: Due to the unique nature of their products, niche marketers can often command higher prices, resulting in higher profit margins.
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Survival Challenges: A niche market can present challenges for sustainability, as the business may struggle during downturns if dependent on a limited customer base. Strong marketing and customer relations are vital to mitigate these risks.