Targeting strategies - Marketing Management

Having evaluated the relative attractiveness of different market segments we can position to select a targeting strategy. A company can select from three broad strategies: undifferentiated, differentiated and concentrated target marketing. Undifferentiated marketing

This is based on ignoring any segmentation in the market. Instead, a ‘blanket’ approach is used with a strategy aimed at the entire market rather than any single segment, or combination of segments. A company will usually produce one undifferentiated product, relying on mass advertising and distribution to reach as many customers as possible. Undifferentiated marketing is most suitable where demand for a product is relatively homogeneous. It should also have the potential to yield significant economies of scale in both marketing and production. The existence of disaggregated/ heterogeneous demand renders this global approach to market segmentation and targeting unsuitable.

Differentiated marketing

This is based not only on the recognition that different segments exist in a market, but upon a decision to target several or all of these. The company designs a separate marketing programme for each market segment it decides to serve. Because each segment is specifically targeted, the company expects to increase overall company sales and market share. Any increase must be compared with the greater costs of having many individual marketing programmes.

Concentrated marketing

This strategy recognizes the existence of different market segments, but instead of serving several of these, a concentrated or niche marketing strategy focuses marketing effort on a single market segment. In this way, economies of scale in both production and marketing can be achieved, while at the same time more nearly meeting the needs of target group customers. The disadvantage of this strategy is that it renders a company vulnerable should anything threaten sales in the selected segment.

Many factors affect the choice of an appropriate targeting strategy. Smaller companies with fewer resources often have to compete by specializing in certain market segments and pursue a concentrated marketing strategy. Competition will also affect choice of strategy. Where competitors do not segment and target respective customer groups, a strategy of concentrated or differentiated marketing can produce a significant competitive advantage. The choice of marketing strategy is ultimately a question of comparing costs and benefits of each approach. The selection of specific target markets only concerns companies that decide to pursue a concentrated or differentiated targeting strategy. With those two strategies, a company must decide which of the segments in the market it is best able and willing to serve. This decision must of course be based on the outcome of an evaluation process.

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