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What makes a market segment a good candidate for a niche strategy?
AIt has growth potential but does not matter to giants
BIt is the largest segment in the whole of the market
CIt is already served well by two large competitors
DIt contains only buyers who choose on price alone
Answer & Solution
Correct answer: A. It has growth potential but does not matter to giants
1. A niche firm needs a segment worth serving and one it can hold.
2. Good growth potential makes the segment worth serving.
3. The segment must not be crucial to the success of major competitors, or they will fight for it.
4. Those two conditions together define a good niche candidate.
5. The largest segment and a segment already served well by two large rivals both invite attack.
6. A segment of pure price buyers offers no defence, since any cheaper rival takes it.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 11 "Creating Products and Pricing Strategies to Meet Customers' Needs", section 11.2 Creating a Marketing Strategy_
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