Ways Firms Pursuing a Concentrated Targeting Strategy Can Grow
There is a misconception that concentrated marketing will limit growth. However, while the set of consumers targeted is limited to a single target market, that does not restrict growth opportunities for the firm.
A concentrated marketer can grow through:
- geographic market expansion (reaching a greater proportion of their target market),
- increasing the product range that they offer to the target market, and
- simply by increasing the variety and choice of their existing products (that is, increasing the depth and breadth of their offerings).
Growth by Introducing New Products
Let’s look at an example of firm that markets hiking and camping equipment, such as tents and protective clothing. They have adopted a concentrated marketing strategy and pursue a defined target market of regular hikers and campers (those who hike and camp on a regular basis, as opposed to a casual bushwalker).
In terms of growing through product development, they could introduce new products such as:
- hiking shoes
- easy-to-carry cooking equipment
- communication devices, such as satellite radios
- easy-to-carry, non-perishable food
- vitamins and energy bars and beverages
- videos, books, and online courses for serious campers and hikers
- information sessions and online communities, addressing common Q&A’s
- drones, cameras, binoculars
- various forms of safety equipment and first-aid kits
- and so on
As you can see, although the business has a defined target market, which in this case has been defined using a psychographic variable of activity = hiking and camping, there is a wide variety of new products they could introduce to their customers.
As they build stronger relationships with their target market, they will become the “go to” brand/firm for anything related to camping and hiking for their customers.
This creates a strong brand, clear positioning, stability of cash flow, ability to charge a price premium, and a strong barrier to potential new competitors.
Growth Through Market Development
Another potential way that they could easily expand their business is through market development. With this approach, they could continue with the same defined target market and then select and enter international markets that have a high proportion of the same type of consumer segment.
In this way, they have maintained their target market and have continued to use a concentrated target market strategy but continue to expand their offerings and reach a greater proportion of their targeted consumers.
Another example here would be the coffee chain Starbucks, who targets people who enjoy premium coffee in a relaxing and friendly environment.
They pursue a single target market, making them a concentrated marketer, but expand their operations by pursuing market development through more locations and expanding into 100’s countries, and by introducing complementary products such as snacks and cakes.
Growth by Using Product-variety Marketing
For this example, let’s assume that a company is concentrating on providing healthy food and snacks for children (that is their only target market).
One way that they could grow would be to produce their products in an array of:
- different packaging (for convenience and/or fun)
- in different flavors
- different serving sizes
- different quality levels (high or low quality)
- and so on
This introduces variety and choice which is important in the food and snack market.
They could also integrate elements of fun in the packaging, brand-name, shapes and design of the snacks themselves, and even augment the product with online access to games and other activities designed for children.
Obviously, these tactics will enhance their market share because they provide the variety and choice, but it will also help build their brand, customer loyalty, customer engagement, and a strong clarity of their positioning.
All of these tactics create a very stable and long-term level of profits, as their market share becomes more protected, and there is an ability to charge a price premium.