Why Use Concentrated Target Marketing?

Where Concentrated Target Marketing Fits In

Concentrated marketing is a target market strategy where the firm focuses on one selected target market. It is a targeting strategy that is midway between an undifferentiated (mass marketing) strategy and a differentiated marketing strategy.

A firm using an undifferentiated targeting strategy does not “differentiate” between any consumers in the marketplace and provides ALL consumers the same product and marketing mix offering without variation.

Whereas a firm is using a differentiated targeting strategy, selects multiple market segments for their target markets (that is, they have two or more target markets) and provide a differentiated product mix and marketing mix offering for EACH of their target markets.

Concentrated marketing is a mid-level approach between these two targeting strategies as concentrated marketing has ONE target market, as opposed to undifferentiated that has ZERO target markets and differentiated marketing which has at least TWO target markets, as per the following diagram:

Concentrated Marketing Should NOT Be Ignored as a Viable Long-term Strategy

In most marketing textbooks, when they are discussing choices of target market strategies, they typically suggest that differentiated target marketing strategy (pursuing more than one target market) is the ideal approach, particularly for medium to large companies who are seeking continuous growth.

However, this is not always the case. While concentrated target market strategy may appear to be the “poor relation” when it comes to developing a targeting strategy, there are multiple advantages for a company who chooses to pursue ONE target market only = adopting a “concentrated target market strategy”, by concentrating on a single market segment.

17 Reasons to use a Concentrated Target Market Strategy

Here are 17 great reasons why some firms should use Concentrated Target Market Strategy…

1 = the firm has a clear target market, which will allow the firm to develop a more tailored product mix and overall marketing mix

2 = the firm will have a limited competitive set – in undifferentiated marketing the firm competes against EVERY competitor, and for differentiated marketing the firm has multiple competitors in each of its market segments = which means it has lots of competition!

3 = the firm will have a deeper understanding of the marketplace, its consumers, its key competitors, and key relationships and trends in its macro and micro-environments – this is very important for long-term success and the ability to adapt to the changing needs of the market

4 = the business is more likely to have a limited product mix (in comparison to a differentiated marketing approach only), which will provide efficiencies at a cost advantage over differentiated marketers (but not undifferentiated marketers, who will usually have an economy of scale advantage over them)

5 = their promotional mix and selection of media is likely to be more defined and hopefully more effective, in comparison to the two other approaches who would be required to have a broader selection of media and be less effective (or have a lower ROI) as a result

6 = in many ways, a firm adopting a concentrated target strategy will have a simpler business to operate, as their strategy is built around a single target market, which they will generally have a strong understanding of their and have built solid relationships, market share, and brand equity

7 = if the firm’s/brand’s strategy has been successful in gaining significant market share in that market segment, then this will greatly reduce competitive incentives to enter/attack that segment, and perhaps the firm will even enjoy somewhat “monopoly conditions” as the market leader in that segment

8 = the brand may benefit from a strong association with a defined target market = such as, as the brand strength builds, this may lead to supportive word-of-mouth from loyal customers, as well as the ability to charge a price premium, and to introduce new products that are more likely to be successful because they have an existing loyal customer base

9 = the firm’s resources and investments will be quite selective, as they will not pursue unrelated opportunities, resulting in more efficient use of their funds and less distractions and potential pitfalls

10 = if the firm can build a strong customer following (loyalty and advocates) within the segment, then they should be able to grow the business successfully through product line extensions and new product developments

11= if their target market also exists in international markets, then they can continue to grow their business internationally, with only minor modification, needed to their product designs and marketing mix – thereby retaining a concentrated target market strategy (such as the approach adopted by Starbucks across the globe)

12 = over time, it is likely that the firm will build strong relationships with key suppliers, retailers and other partners, as they became an important component in the channel for accessing a specific target market

13 = it is likely that the firm’s/brand’s positioning will be quite well defined and clearly communicated to the target market, as there is a strong focus on one set of consumers only

14 = the firm/brand is in a good position to build customer engagement and build “communities online, most likely through social media, which should lead to positive word-of-mouth and continued endorsement by consumer advocates

15 = the firm/brand is also more likely to generate positive media attention and also attract the interest of key influencers, which will also help drive awareness and brand equity

16 = their market share position should become relatively protected, as there is reduced competitive incentive, and the firm/brand should attract and hold a strong share-of-customer

17 = and, for a start-up/new business initially using a concentrated target market strategy may be an ideal stepping-stone for later expansion into new market segments and progressing into a differentiated target market strategy

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