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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 = 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
18. Enhanced Customization Opportunities = Focusing on a single target market allows firms to offer highly customized solutions or services, which can deepen customer satisfaction and loyalty. For example, a company specializing in ergonomic furniture could offer personalized designs tailored to individual customers within the target segment.
19. Easier Adoption of Emerging Technologies = With a clear focus on one market, firms can quickly adopt and implement new technologies that are most relevant to their specific audience, enhancing their competitive advantage. For instance, leveraging AI-driven customer insights to refine product offerings for a niche market.
20. Better Crisis Management = By having an in-depth understanding of a single segment, firms are better positioned to respond to market disruptions or consumer concerns, ensuring quicker and more effective recovery during economic or industry downturns.
21. Development of Thought Leadership = A firm with deep expertise in a specific market can establish itself as a thought leader, creating educational content, hosting events, or sharing insights that strengthen its reputation within the niche.
22. Improved Advocacy from Influencers = Concentrated strategies make it easier to identify and collaborate with influencers who resonate strongly with the target market. This can amplify brand reach and credibility within the segment.
23. Enhanced Data Quality and Insights = Collecting and analyzing data from a single market segment ensures higher quality insights, which can lead to more accurate predictions and better decision-making.
24. Higher Employee Expertise and Morale = Employees develop specialized skills and expertise in the chosen market, which boosts operational efficiency and morale. A clear focus often aligns team efforts more effectively.
25. Greater Alignment with Sustainability Goals = Focusing on a single segment can enable firms to integrate sustainability practices that align with the values of their audience, creating stronger brand loyalty among environmentally conscious consumers.
26. Opportunities for Subscription Models = A defined target market with recurring needs makes it easier to implement subscription-based services, ensuring consistent revenue streams and stronger customer retention.
27. Flexibility in Experimentation = With fewer markets to manage, firms can experiment with new strategies, promotions, or products more easily, using the insights to optimize offerings without impacting multiple segments.
28. Opportunity to Build a Premium Brand Image = A concentrated approach often allows firms to position themselves as specialists, commanding premium pricing and elevating their brand perception.
29. Lower Risk of Brand Dilution = By focusing on one market, firms avoid the risk of overextending their brand into unrelated markets, maintaining a strong and consistent brand identity.
30. Easier Adoption of Community-Centric Marketing = Building strong, engaged communities within the target market is easier with a focused approach, fostering long-term loyalty and organic growth through advocacy.
FAQs on Why Use Concentrated Target Marketing?
Why does a concentrated target market strategy provide a clearer focus?
It allows the firm to have a well-defined target market, enabling the development of a tailored product mix and overall marketing mix to meet specific needs effectively.
How does a concentrated strategy limit competition?
By focusing on one segment, the firm faces fewer competitors compared to undifferentiated or differentiated marketing, where competition spans broader or multiple markets.
What makes concentrated marketing suitable for long-term success?
It enables a deeper understanding of the marketplace, including consumers, competitors, and market trends, which is vital for adapting to changes over time.
How does a limited product mix benefit a concentrated marketer?
A focused product mix provides efficiencies and cost advantages compared to differentiated marketers, although undifferentiated marketers may still have scale economies.
Why is the promotional mix more effective in concentrated marketing?
The targeted approach defines media selection more precisely, often resulting in a higher return on investment compared to broader strategies.
How does concentrated marketing simplify business operations?
The strategy revolves around a single market, making operations simpler while leveraging strong relationships, market share, and brand equity.
Can concentrated marketing create a competitive moat?
Yes, if the firm gains significant market share, competitors are less incentivized to enter, potentially leading to monopoly-like conditions.
How does brand association strengthen in a concentrated strategy?
A strong connection with the target market fosters word-of-mouth, supports price premiums, and enhances new product success through an established loyal customer base.
Why are resource allocations more efficient in concentrated marketing?
The firm avoids unrelated opportunities, focusing investments on relevant areas, reducing distractions, and minimizing risks.
How does concentrated marketing support growth through product development?
A strong, loyal customer base allows the firm to successfully expand through product line extensions and new developments within the segment.
Can concentrated marketing support international expansion?
Yes, firms can expand to international markets where the same target market exists, requiring minimal modifications to their product and marketing strategies.
How does concentrated marketing foster partnerships?
Over time, the firm can build strong relationships with suppliers, retailers, and other partners, becoming a vital part of the distribution channel for the chosen market segment.
Related Articles
- What is Concentrated Marketing?
- How Concentrated Marketing Differs
- How Can Concentrated Marketers Grow ?
- Differentiated or Concentrated Marketing?
- How many target markets?
