Identify at least three challenges when setting up a business. Explain why they are challenges:
Lack of Capital is probably the biggest challenge when starting a new business. Most small businesses are dependent on personal savings as they do not generally get funds from investors when starting up. And since most entrepreneurs are young and they do not have much funding to invest, their business will kick off much slower than an entrepreneur with age and savings. This lack of funds also limits business plans. Entrepreneurs will not be able to put together a substantial marketing plan or hire employees with a lack of capital, and without a marketing plan it will be extremely difficult ...view middle of the document...
These are products that do not focus on the majority of the public, but concentrate on smaller specialized groups.
One example of a niche product would be Dog Food for giant breed dogs. Trying to find a good quality dog food for dogs that exceed 120 pounds is extremely hard to do, but some manufacturers have starting provide this product. Two examples are Eagle Pack and Nutro. Another example of a niche product is Victory Lady Fitness Centers. Victory Lady specializes in training and teaching women in fitness and nutrition. They are not like American Family Fitness because American Family does not specialize in a certain audience. African American Hair Products would be one more example of a niche product. With this product is focuses on one race of the population. Other hair products are generic in population, meaning everyone can us them. But this line of hair products is directed toward African Americans, which provides them with nutrients and vitamins that their hair needs to be healthy.
Explain why a niche company might have an advantage in a market. Would price necessarily be an advantage? Explain why or why not.
A niche company might have the advantage in the market place because they are focusing on certain groups. Niche marketing is such a small circle; companies can circulate their name around to prospective clients more quickly. Niche Marketing focuses their marketing on specific clientele; those customers will be more likely to remember those companies and their products and services. Another big advantage to niche marketing is lower marketing cost. Niche companies will be targeting a specific group when marketing their goods and services; they will not have to spend money on big generalized ads.
Pricing in niche marketing is an advantage to the companies because they are supplying their goods and services to a smaller group that ultimately they can ask for higher rates since the company specializes in that field.
Identify and explain three reasons why customers would pay more for exclusivity.
One of the greater reasons why customers would pay more for exclusivity is quality of the product. If a consumer buys a product and is not satisfied with it, then they will never go back to that product. This also applies if the same customer buys a higher price product and the product exceeds their expectation, then they will keep coming back regardless of the price.
Secondly, comfort in a product is a reason why customers would pay a higher cost. Some customers are extremely comfortable in a Mercedes Benz. Mercedes have technology in their vehicles that make them safer to drive by recognizing if you are swerving into another lane or gaining to quickly on the vehicle in front of you. Also it can parallel park itself and the head lights are brighter and wider, which allows...