Market targeting is an essential aspect of your business strategy, but way too often companies get confused about the optimal strategy to deploy. While there are several types of targeting strategies in marketing that can (and will) be used by one company, understanding when and how to target your audience correctly is essential for maximizing profits and efficiently using resources. Implementing targeting strategies correctly in marketing starts with fully understanding them and their use cases.
In this article we’ll cover what market targeting is and go into the four different targeting strategies in marketing. We define the differences between the different types of targeting strategies, and discuss advantages and disadvantages of each targeting strategy.
Read on to learn all you need to know about targeting strategies in marketing.
What is Market Targeting?
Market targeting starts with evaluating and defining your target market, typically along the four targeting dimensions that marketing professionals usually cite.
Demographic – Characteristics such as age, gender, occupation, income, and education.
Geographic – Location and region
Psychographic – Interests, hobbies, values, attitudes, lifestyle choices
Behavioral – Past and present decisions
A Forbes study found that “the primary challenge for audience targeting is identifying the proper personas”. Using targeting criteria right, you should be able to obtain a clear-cut definition of your target market.
Market targeting is about taking these four dimensions to define your target market, and developing strategies necessary to reach your chosen market segment efficiently and effectively.
The types of targeting strategies you use will rely on the type of product you want to bring to the market, while the criteria necessary to define your target market will strongly depend on what kind of target audience you have in mind. In other words, different strategies are needed for different products and services and the ideal customers you are targeting, which should mirror your targeting criteria. In the following, we take a closer look at the four different types of targeting strategies in marketing.
What Are the Four Market Targeting Strategies?
Let’s briefly define the four types of targeting strategies before taking a deeper dive into the advantages, disadvantages, and use cases of each one below.
- Undifferentiated marketing (mass marketing) – Marketing to the masses, reaching as many people as possible.
- Differentiated marketing (segmented marketing) – Marketing to key market segments with multiple unique offers and promotional messages that vary depending on the target customers.
- Concentrated marketing (niche marketing) – Marketing entirely (or almost entirely) to a single small niche subset.
- Micromarketing – Often confused with niche marketing, this strategy is targeted to even smaller markets including locales and individuals.
The Four Types of Targeting Strategies in Marketing in Detail
1. Undifferentiated Marketing (Mass Marketing)
Undifferentiated marketing is a strategy that makes essentially no priority between target market segments. This means the entire mass of the market is perceived to be the target customer, and the goal of these campaigns is to reach as many potential customers as possible.
Mass marketing strategies involve a single message that generally resonates with everyone. This type of targeting strategy is commonly deployed by brands and industries that can be thought of as supplying essential products and services or are widely consumed.
Examples of industries that partake in undifferentiated marketing are:
- General hygiene products (toothpaste, soap, detergent)
- Gasoline and energy providers
- Dairy products
- Fruit juices
Companies like Crest and Colgate use nearly identical ingredients, have nearly identical selling points and offer nearly identical flavoring. Due to this, the best strategy to differentiate themselves from the overall market for a standard toothpaste option is undifferentiated marketing. The company that reaches the most people most efficiently will drive better sales and profits.
Common distribution channels for mass marketing strategies are:
- Television ads
- Print media ads
What are the benefits of mass market targeting?
- Increased brand awareness/wide customer reach by getting as many eyeballs on your product or service as possible.
- Lower costs due to the efficiency and lack of necessity for expensive, highly targeted advertising and market research.
- Highly reusable adverts as the single generic message does not need to be altered constantly for different targets.
What are the drawbacks of mass market targeting?
- High dependence on scalability as this broad marketing strategy requires necessary capital and ability to meet high demand from such a largely distributed audience.
- Higher levels of competition as well established brands are also competing for these eyeballs using the same distribution methods. Also, generic messages leave little room for two competing brands to differentiate themselves.
- Lack of customization also affects your ability to differentiate your brand from competitors, forfeiting the ability to leverage unique selling propositions (USPs).
2. Differentiated Marketing (Segmented Marketing)
Segmented marketing is more or less the opposite of undifferentiated marketing. Instead of targeting the masses, this type of targeting strategy prioritizes segments of your target audience.
What makes differentiated marketing successful is the ability to reach the people who are most likely to purchase your product or service with messages unique to each segment.
Another key benefit from differentiated marketing is the ability to leverage unique selling points or core products that focus on the aspects of your product/service that best serves each individual.
You can easily see that differentiated marketing is a very powerful strategy and one of the targeting strategies used most in marketing.
For example, an environmentally friendly and sustainable clothing brand could segment its product to advertise specifically to customers who care about different benefits. One t-shirt manufacturer could target people who prioritize organically made ingredients, while another could target the softness of the materials, and another could target the greenhouse gases that weren’t created compared to other fast-fashion branded shirts. This could be targeted further from here, such as male and female, fans of shirt styles, colors, etc.
What are the advantages of differentiated marketing?
- Highlighting competitive advantages for various customers
- Reaching wide audience types
- Ability to adjust adverts quickly
- Develop efficient distribution channels
What is the main disadvantage of segmented marketing?
Differentiated marketing strategies can be quite costly. It requires significantly more money and work, constant management and changes as well as lots of targeted market research.
3. Concentrated Marketing (Niche Marketing)
Concentrated marketing targets a small subset of a larger market. This strategy is commonly used by businesses that have a strong unique selling proposition that attracts a specific type of customer.
These niches could also be focused on segments defined along demographic, geographic, behavioral or psychological dimensions. Niche marketing also takes advantage of very few marketing channels such as Facebook groups, Tik Tok followers of individuals/accounts, or visitors of a specific website.
A good example of this comes from a study published in the Journal of Consumer Marketing regarding targeting marketing efforts towards Millennials. They found that “there are digital marketing strategies that are considerably more effective in grabbing the attention of Millennials, motivating repeat visits to a web site, and encouraging Millennials to write online reviews.”
By concentrating on specific avenues and distribution channels, the finding concluded that they could drastically increase website traffic and reviews.
- Baseball fans
- Dog owners
- Sustainable fashion
Major advantages of concentrated market targeting are the ability to target a loyal and focused customer base as well as facing less competition. The major disadvantages of concentrated marketing are smaller markets and fewer growth opportunities.
What are the other benefits of concentrated marketing strategies?
- Requires fewer resources as efforts are highly targeted towards one audience segment and through one or two distribution channels (Google ads for specific website/topic searches or followers of specific Instagram accounts).
- High customization that can rapidly change based on industry trends and the behavior of your ideal target audience.
- Testing and analysis are easier as having concentrated marketing through fewer channels reduces the time and effort needed to evaluate the success of each campaign.
The last type of targeting strategy in marketing is micromarketing, and it is probably the least frequently applied one. A micromarketing strategy targets individuals or small groups within a niche market. We often call this targeting strategy individual marketing. It can be so highly targeted (or re-targeted) that each campaign is directed towards only one person. Micromarketing techniques can take small niches and more strongly define your targets by specific segments such as age or location.
Using the 4 examples above from niche marketing, we could create more highly targeted markets that fall into a micromarket targeting:
- Fans of the NY Yankees baseball team
- Kids under 10 years old who love dinosaurs
- Golden retriever owners looking for organic dog food
- Sustainable athletic fashion for women
Local marketing can also be considered a section of micromarketing when the locale is highly specific to small areas such as neighborhoods or even specific streets or places.
An example of this could be a small local coffee shop that only targets people in their neighborhood where customers visit by walking past. This is beneficial instead of spending resources marketing to other locations where many competitors are situated between your location and the customers’ starting point.
Micromarketing is often deployed by businesses towards their most loyal customers, commonly seen through targeted email campaigns. Services and storefronts also tend to rely on micromarketing in specific regions or to fit the unique needs of a customer base.
What are the benefits of micromarket targeting?
- Reach your most lucrative customers
- Efficient use of resources
- Effective for building customer loyalty with specific messaging
What are the drawbacks of micromarket targeting?
- Highly targeted adverts tend to be most expensive
- Requires thorough market research
- Small audience reach
- Lack of scalability
Key Things to Remember
Marketers are consistently testing and innovating campaign strategies with different goals and key performance indicators (KPIs). A combination of targeting strategies is often required. A brand awareness campaign may be more effective for an individual company using a concentrated marketing strategy, but that company may want to use a micromarketing target strategy for a unique product offering. Understanding the differences between these types of targeting strategies used in marketing is critical to develop highly effective marketing campaigns.