Targeting Strategies
Category: Marketing
Once segments have been identified, decisions about how many and which segments to target can be made. Essentially there are two distinct types of strategy which can be pursued. Firstly, a company may decide to adopt a concentration strategy, and direct all its marketing effort towards a single target segment, by creating and maintaining a single marketing mix. Lamborghini, for example, focuses on the luxury sports car segment of the automobile market. The chief advantage of a concentration strategy is that it allows a firm to specialise. The firm can analyse the characteristics and changing needs of a distinct group of customers and focus all its resources on satisfying that group’s needs. It also allows SMES to compete with much larger organisations, which may not wish to expend resources on small specialist segments.
Concentration does however have drawbacks as well It clearly represents the high risk scenario of having «all your eggs in one basket». Also, when a company establishes a strong association with a particular specialist segment, it may be extremely difficult for them to re position into other segments. Ferrari, for example would have trouble re-positioning into the economy car segment, whilst Lada might find it difficult to re-position credibly in the luxury car segment, even if they had an excellent product.
The second targeting strategy option is for the firm to direct its marketing effort at two or more distinct segments, by developing and maintaining a different marketing mix for each segment. This is a multisegment strategy. Firms practising such a targeting strategy generally experience much higher marketing costs, because such a strategy requires much more research and monitoring activity, as well as the maintenance of several promotions, products, distribution and pricing strategies.