Wednesday, 29 September 2010

The economic sense in segmenting your market

There are many different ways to categorize marketing, but one very simple way is this:
  • Undifferentiated
  • Differentiated
  • Concentrated
Undifferentiated marketing is where everyone in your target market is treated the same. TV advertising reaches everyone – those who want clean, shiny floors and those who have no interest in clean shiny floors.

Differentiated marketing segments the target market into groups with common interests. With some knowledge of these common interests, you can then tailor your message more precisely. So you don’t sell cleaning products to teenagers, for example. Or recruitment services to corner shops. That sort of thing.

Concentrated marketing is where marketing messages are aimed at a small, precise market. For example, a company might choose to market to artisan cheese makers in Wigan or museum curators outside of the capital. I practice, I'm not absolutely sure how this differs from differentiated marketing.

This idea was first put forward by Philip Kotler, and sounds eminently sensible. In fact much of marketing theory has been built on the idea of differentiated marketing, or segmenting the market.

When resources are limited (which they always are) choices have to be made. Figuring out which part of the market is most likely to respond to offers of what you sell makes good economic sense. Whatever label you put on it.

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