The bakery is clearly targeting a niche market. Niche markets are defined by their focus on a specific segment of the population with particular needs or preferences. In this case, the bakery caters to individuals with dietary restrictions (gluten-free) and ethical considerations (vegan). These are not the needs of the majority of the population.

The bakery's product offering is specialised, differentiating it from mainstream bakeries that offer traditional products. The marketing strategy would likely focus on reaching health-conscious consumers, individuals with allergies, and those following vegan lifestyles through targeted advertising (e.g., online health forums, vegan communities) and partnerships with health food stores.

A mass market would aim to satisfy the general demand for baked goods, offering a wide range of products to appeal to everyone. The bakery's limited product range and specific dietary focus demonstrate a clear departure from this approach. Therefore, the bakery's business strategy aligns with the characteristics of a niche market.

A niche market, defined as a smaller, more specific segment of the population with particular needs and wants, is generally a more appropriate target market for a company selling luxury watches than a mass market. A mass market approach would be highly inefficient. Luxury watches are expensive and cater to a specific demographic – individuals with high disposable income and an appreciation for craftsmanship and status.

A niche market allows the company to tailor its marketing and product development to this specific group. Marketing can be highly targeted, focusing on channels frequented by affluent individuals (e.g., luxury magazines, exclusive events). Product features can be customised to meet the specific desires of this market segment (e.g., limited edition releases, bespoke options). Customer loyalty is more likely to be achieved as the product directly addresses their needs and aspirations.

A mass market approach would involve significant expenditure on advertising to a broad audience, many of whom would not be interested in or able to afford the product. The company would also struggle to effectively communicate the value proposition of a luxury watch to a diverse audience. Therefore, a niche market strategy is far more likely to be successful for a luxury watch company.

Advantages of targeting a niche market:

• Less competition: Fewer companies are likely to target the same specific group.
• Higher profit margins: Customers are often willing to pay a premium for specialised products or services.
• Stronger customer loyalty: Meeting specific needs fosters stronger relationships and repeat business.
• More effective marketing: Targeted marketing campaigns are more efficient and cost-effective.

Disadvantages of targeting a niche market:

• Smaller market size: The potential customer base is limited, restricting growth.
• Higher per-customer costs: Marketing and distribution costs can be higher relative to the number of customers.
• Vulnerability to changes in niche preferences: Shifts in customer tastes can significantly impact the business.
• Requires specialist knowledge: Understanding the niche market's needs requires in-depth knowledge and research.

Compared to a mass market, a niche market offers higher potential profitability but carries greater risk due to its limited size and vulnerability. A mass market offers greater volume potential but faces intense competition and lower profit margins. The choice depends on the business's resources, risk appetite, and strategic objectives.