A mass market is a large segment of the population with relatively uniform needs and wants. Selling to a mass market offers several advantages. Firstly, economies of scale are achieved due to large production volumes, leading to lower average production costs. This allows for competitive pricing and potentially higher profit margins. Secondly, advertising costs can be spread over a large customer base, making advertising more cost-effective. A wider distribution network is also easier to establish and manage, ensuring the product is readily available to a large number of consumers.

However, there are also disadvantages. A mass market is highly competitive, requiring significant marketing expenditure to stand out. The product must be relatively standardised to appeal to a broad audience, potentially leading to a lack of customer loyalty. Meeting the diverse needs of a mass market can be challenging, and a generic product may not fully satisfy individual preferences. Furthermore, a large-scale operation can be less flexible and slower to adapt to changing consumer trends compared to 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.

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.