Marketers have defined five basic strategies for segmenting and targeting market identification: undifferentiated marketing or mass marketing, differentiated marketing, concentrated marketing (niche marketing), and micro marketing (hyper-segmentation).
Table of Contents
Different strategies for segmenting and targeting
Mass marketing (undifferentiated marketing)
Undifferentiated marketing/mass marketing is a method of reaching out to as many people as possible in order to spread a single message that marketers want their target market to know. When television first came out, almost all commercial campaigns used undifferentiated marketing to spread a single message to a large number of people. The commercials that aired on television back then were often similar to one another and attempted to make the viewers laugh.
These same commercials would play on air for multiple weeks/months to target as many viewers as possible, which is one of the benefits of undifferentiated marketing. However, there are disadvantages to mass marketing because not everyone thinks the same way, making it extremely difficult to convey the same message to a large number of people.
Differentiated marketing Strategy
Differentiated marketing is the practice of advertising different messages to different groups of people within a target market. Differentiated marketing, on the other hand, is a costly method to implement. Because messages are changed each time to advertise different messages, it is extremely expensive to do as it would cost to promote a different message each time.
Differentiated marketing also necessitates a significant amount of time and energy, as it takes time to develop ideas and presentations to market a variety of messages. It also necessitates a significant amount of resources to employ this method. However, investing all of one’s time, money, and resources into differentiated marketing can be worthwhile if done correctly, as the various messages can successfully reach and motivate the targeted group of people to follow the messages that are being advertised.
Concentrated Marketing or Niche Marketing
Niche marketing is a business term that refers to selling products and services to a specific target market. Despite its appeal to small businesses, niche marketing is widely regarded as a difficult marketing strategy, as businesses may require extensive and in-depth research to reach their specific target market in order to succeed.
Caragher (2008) defines niche marketing as “when a firm/company focuses on a specific aspect or group of consumers to deliver their product and marketing.” Niche marketing is also known as concentrated marketing because businesses focus all of their resources and skills on a single niche.
Many businesses have found niche marketing to be one of the most effective marketing strategies because it identifies key resources and provides the marketer with a specific category to focus on and present information to. This gives companies a competitive advantage over larger firms targeting the same demographic, resulting in higher profit margins.
Smaller firms typically use this method so that they can focus on one aspect and give full priority to that segment, allowing them to compete with larger firms. Some niche marketing specialties assist the marketing team in determining marketing programs and providing clear and specific establishments for marketing plans and goal setting.
According to Hamlin et al. (2015), niche marketing is typically used when a company responds to an existing situation. There are various methods for firms to identify their niche market, but the most common method is to conduct a marketing audit. This is the stage at which a company evaluates a variety of internal and external factors.
The audit factors identify the company’s weaknesses and strengths, as well as the company’s current client base and marketing techniques. This would then aid in determining which marketing strategy would best suit their niche.
To achieve successful niche marketing, five key aspects or steps are required:
- Develop a marketing plan: When a company’s marketing team creates a market plan, they evaluate the company’s current state, the niches they want to target, and any potential competition. A market plan can include elements such as target market, consumer interests, and resources; it must be specific and relevant to that group of consumers, as niche marketing is its specialty.
- Focus on your marketing program: When employees focus on your marketing program, they use marketing tools and skills to the best of their abilities in order to maximize market awareness for the company. Niche marketing is used not only to maintain a competitive advantage in the industry but also to attract more customers and expand their client database. The company can then consistently implement its strategy by utilizing these tools and skills.
- Niche to compete against larger firms: Smaller and medium-sized businesses can compete with niche marketing because they can focus on one primary niche, which helps the niche grow. Smaller businesses can concentrate on identifying their clients’ problems within their niche and then provide different marketing to pique consumer interest.
- Niche based upon expertise: When new companies are formed, various people bring various types of experience to the company. Another type of niche marketing is niche based on expertise, in which someone with extensive experience in a specific niche may continue to market for that niche because they know it will produce positive results for the company.
- Develop niches through mergers: A company may have discovered a potential niche but is unable to market its product/service to that niche. This is where industry experts are brought together. As one company may have the tools and skills to market to a specific niche, while another may have the skills to gather all of the necessary information. According to Caragher (2008), if done correctly, niche marketing can be a very powerful concept.
Overall, niche marketing is an excellent marketing strategy for businesses, particularly small and medium-sized businesses, because it is a focused and straightforward marketing approach. Once a company’s niche has been identified, a team of marketers can use relevant marketing to meet the wants and demands of that niche. Niche marketing is also closely related to direct marketing because direct marketing can be easily applied to niches within target markets for a more effective marketing approach.
Direct marketing
Direct marketing is a technique that allows businesses to market directly to their customer’s needs and desires; it focuses on consumer spending habits and potential interests. Direct marketing is a communication channel used by businesses to interact with and reach out to their existing customers. Direct marketing is carried out by collecting consumer data via various means.
The Internet and social media platforms such as Facebook, Twitter, and Snapchat are two examples. These are a few online methods for organizations to gather data on what their customers like and want, allowing them to cater to what their target markets want and their interests. This marketing method is becoming more popular as data allows organizations to develop more effective promotional strategies and better customize promotional offers that are more accurate to what customers like.
It will also allow organizations to use their resources more effectively and efficiently, as well as improve customer management relationships. The RFM model is an important tool that organizations use in direct marketing (Recency-Frequency-Monetary Value). Despite all of the benefits, this method can be extremely expensive, which means that organizations with limited budgets would struggle to use it.
ONLINE TARGETING
Marketers can now segment markets at ever-narrower levels, right down to the individual consumer, thanks to digital communications. This method is referred to as micromarketing, cyber-segmentation, or hyper-segmentation. In effect, this enables the marketer to pursue both a differentiated marketing strategy and a niche marketing strategy to reach the market’s smallest groups.
Hyper-segmentation is supported by sophisticated information technology, large databases, computerized and flexible manufacturing systems, and integrated distribution systems. Data from electronic communications devices is captured, mapped, and logged using a management information system. This allows for the integration of observed behavior (domains visited) with motives (content involvement), geography (IP addresses), demographics (self-reported registration information), and brand preferences (site loyalty, site stickiness).
Additional data inputs could include behavioral variables like frequency (site visits), diversity (visitation across different landscapes), and fluidity over time. This data is analyzed by business intelligence software, which may also receive data inputs from other internal information networks. Marketers and advertisers can then use a library of stock images and phrases to create real-time customized promotion offers that are delivered to prospective buyers who have a strong interest in the product or are at an advanced stage of buyer readiness.
With the increased availability of electronic scanner data, there has been a greater emphasis on research on retail micromarketing and pricing issues. Stephen J. Hoch et al 1995 .’s research provided empirical evidence for the micro-marketing concept. Alan Montgomery demonstrated in 1997 that micromarketing strategies can increase gross profits by using hierarchical Bayes models to improve price elasticity estimation procedures.
Advertising has become more efficient at reaching relatively small target audiences since the advent of social media. People are constantly exposed to advertisements and the content they contain, which is critical to their success. Previously, advertisers attempted to build brand names through television and magazines; however, advertisers have begun to use audience targeting as a new medium.
The rise in internet users and its widespread availability has enabled advertisers to do so. Targeting specific audiences has enabled advertisers to adapt the content of their advertisements to the needs and interests of the individual viewer. The content of various advertisements is tailored to each consumer’s specific requirements.
With the introduction of the personal email message, the first forms of online advertising targeting emerged. The introduction of the Internet in the 1990s gave rise to a new advertising medium; however, most advertising was limited or illegal until marketers realized that the Internet was a multibillion-dollar industry.
Many argue that the most significant disadvantage of this new age of advertising is the lack of privacy and transparency between consumers and marketers. Much of the information gathered is used without the consumer’s knowledge or consent. Those who oppose online targeting are concerned that personal information such as personal finances, health records, and personal identification information will be leaked online.
To target a specific audience, advertisers use three basic steps: data collection, data analysis, and implementation. They use these steps to collect accurate information from various internet users. The information they collect includes the internet user’s age, gender, race, and a variety of other factors. New methods of targeting have emerged as a result of digital communications:
- Addressable advertising
- Behavioral targeting
- Location-based targeting
- Reverse segmentation (a segment-building approach rather than a segmentation approach)
These methods are based on data collected from consumer browsing histories, and thus on observed behavior rather than self-reported behavior. The implication is that the collected data is much more reliable, but it also raises concerns about consumer privacy. Many internet users are unaware of how much information is being collected about them as they browse the internet.
They have no idea how it is collected or what it is used for. Cookies, along with other online tracking systems, are used to monitor consumer internet behavior. Many of the methods that have been implemented have proven to be extremely effective. This has benefited all three parties involved: the advertiser, the manufacturer of the product or service, and the consumer.
Those who oppose targeted online advertising remain skeptical of its effectiveness, frequently citing the lack of privacy afforded to internet users. Many regulations have been put in place throughout the United States to combat this issue.