Concentrated Targeting
Concentrated marketing is a strategy which targets very defined and specific segments of the consumer population.
LEARNING OBJECTIVES
Evaluate the advantages and disadvantages of adopting concentration strategies in consumer marketing
KEY TAKEAWAYS
Key Points
- An organization that adopts a concentration strategy gains an advantage by being able to analyze the needs and wants of only one segment and then focusing all its efforts on that segment.
- Concentrated targeting is particularly effective for small companies with limited resources as it does not require the use of mass production, mass distribution, and mass advertising.
- Since the company has focused all their efforts on one market (essentially putting all their eggs in one basket), the firm is at risk for failing if demand decreases.
Key Terms
- market segment: Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs and desires as well as common applications for the relevant goods and services.
An organization that adopts a concentration strategy chooses to focus its marketing efforts on only one very defined and specific market segment. Accordingly, only one marketing mix is developed. For example, the manufacturer of Rolex watches has chosen to concentrate on the luxury segment of the watch market.
An organization that adopts a concentration strategy gains an advantage by being able to analyze the needs and wants of only one segment and then focusing all its efforts on that segment. They can focus all of their efforts to satisfying the needs of one group and do it well. This can provide a differential advantage over other organizations that market to this segment but do not concentrate all their efforts on it. Concentrated targeting is particularly effective for small companies with limited resources as it does not require the use of mass production, mass distribution, and mass advertising. However, there is no increase in the total profits of the sales as it targets just one segment of the market.
CVS : As a concentration strategy, CVS targets women because they make up 80% of the chain’s customer base.
The primary disadvantage of concentration strategy is related to the demand of the segment. As long as demand is strong, the organization’s financial position will be strong. If demand declines, the organization’s financial position will also decline. Since the company has focused all their efforts on one market (essentially putting all their eggs in one basket), the firm is at risk for failing. Moreover, if a firm has yet to establish its loyalty among customers, a small hit in population or consumer taste can greatly affect their position.