Winning market share is not easy. Keeping it is even harder, especially from deep-pocketed sophisticated marketers such as P&G, J&J or McDonalds. Yet this is exactly what some companies are doing through highly targeted marketing.
Targeted marketing is a blind spot for many mass marketers. Few companies develop an entire brand proposition for small segments because:
- The segments are usually too small and considered insignificant by marketers used to dealing with big numbers (the “rounding error” myopia). Everyone wants to go after the big, juicy segments. Where is the sense of achievement in creating an offering for 3% of the market, even if it is growing twice as fast as the rest of the market?
- The entire value chain is designed for “middle-of-the-road” mass brands that can produce big numbers. The supply chain, sales and marketing approach, rewards and incentives are designed for scalable volume and not for brands targeted at specific segments.
- Efforts to produce focused and well-targeted brands often get lost amongst the initiatives in the new product development funnel.
In the absence of a compelling proposition, most mass marketers plan “initiatives” targeted at certain market segments such as Hispanics or seniors or other such customer groups. These initiatives intend to market the existing mass brand to the targeted segment through (hopefully) relevant promotions or at most a communications campaign.
This makes high-share brands vulnerable to nimble competitors who can build a portfolio of offerings each targeted at a specific segment. This does not automatically mean that you need a new brand for every segment. But you do need a specific offering and customer experience designed for the target segment. Such an offering designed from the ground-up for say the Hispanic segment has a far higher chance of success than a national mass market brand trying to do a Hispanic initiative.
The design of the product itself, it’s packaging, the focus of the brand owners, the salesforce dedication, the degree of exclusive engagement possible with members of the target segment are all usually much higher for a single-purpose targeted proposition rather than a mass brand trying to “also” address a high-growth segment. The highly targeted brands can focus on generating deep and unique insights about their target segment and understand and cater to their special preferences (colors, tones, usability requirements, etc.)
This bodes well for market entrants or small brand owners. Instead of trying to develop me-too products at lower cost, pick a promising high-growth segment and focus your energies on developing a dedicated offering for that segment.
