Finding Customers: Market Segmentation

A key factor to success in today's market place is finding subtle differences to give the business a marketing edge. A business that targets specialty markets will promote its products more effectively than a business aiming at the "average" customer. What makes the business unique? How can these unique features be promoted to "targeted" customers?

Undifferentiated Marketing

Some businesses treat the market as a whole, focusing on what is common to the needs of customers, rather than on what is different. Often called undifferentiated marketing, this technique relies on mass advertising and is implemented on the basis of cost savings to the business. Undifferentiated marketing is successful when the competition is scarce or the product has mass appeal.

Differentiated Marketing

Differentiated marketing builds greater loyalty and repeat purchasing by considering customer needs and wants. Differentiated marketing creates more total sales with a concentrated marketing effort in selected areas. Concentrated or target marketing gains market position with specialized market segments. Target marketing of products or services reduces the cost of production, distribution, and promotion. With differentiated marketing, there is the risk of the market going sour or a competitor entering the same market.