Should I Target Niche Segments or Go Mass-Market?
The answer to every marketing question is always the same: it depends.
So, should you target a smaller limited market and specialise, or go after the mass-market as a generalist? Well, there are three schools of thought. We’ll use a fictional case study of my new accounting system called Morecroft’s Numbers to begin to understand it.
Target Marketing - Kotler
The classic MBA and Kotler stance is segmentation, targeting and positioning. An approach which requires mapping the entire market and understanding how it is segmented based on attributes such as demographics (or firmographics for business-to-business), attitudes and behaviours.
Understanding how attitudes and behaviours change amongst demographics allows you to begin to segment the market.
For example, the accounting software market has several segments, depending on the number of employees, their location, whether they have a bookkeeper or a finance manager and if they are a public or private company. Depending on the variables, I can begin to understand how the market is divided, and I can populate each segment with the market value, number of firms and my market share.
From here, targeting becomes a strategic question. Two or three segments should jump out of the page as clear opportunities. By building a targeted solution based on the segment’s key drivers, I should be able to effectively promote my services to them. I could change the pricing options, the configuration of my software, whether I use salespeople or not and the messaging for my advertising. Morecroft’s Numbers will utilise SEO, PPC and email marketing, amongst other channels.
The problem with targeting is that segments are fluid, not static. People in segments are a moving target. People change jobs, move to new areas, get promoted, grow older etc.
LinkedIn research suggestion that 40% of employees change job every 4 years.
Mass-Marketing - Ehrenberg-Bass
The Ehrenberg-Bass Institute is the world’s leading marketing science research organisation. Its Director, Byron Sharp, published How Brands Grow, a now seminal piece of work and he is highly regarded as one the world’s leading experts in marketing.
The comprehensive studies featured in the book show that brands grow by using a sophisticated mass-marketing approach. They argue that niche/target marketing just restricts your market. They suggest that a brand should aim to increase market penetration by targeting the whole category, and only limiting a market by obvious economic restrictions (such as Skoda and Ferrari).
What does this mean for Morecroft’s Numbers? Well, amongst other things, I should target the whole category that I have distribution in. For example, if my software is clearly only for UK SME’s and not multinational enterprise, then I should consistently advertise to the whole UK accounting systems market. When someone moves from one organisation to another, or gets promoted, they have already been primed by my billboards, branded video ads, magazine ads etc. and are more likely to choose Morecroft’s Numbers when they enter the market.
A Balancing Act - Field & Binet
Field & Binet also released a seminal study titled The Long & Short of it. They looked at hundreds of case studies of advertising campaign effectiveness. What they found is that the most effective advertising campaigns balanced their mass-market brand advertising and targeted ‘sales activation’.
A follow up report with LinkedIn looked at business-to-business data and they found the same pattern. Business-to-consumer brands should balance their long-term brand building with sales activation to a 60:40 ratio, while business-to-business should strike a 50:50 balance for their communication budgets.
So, what does this mean for going mass-market or targeted? Well, where communications are concerned, it seems that a balance of a longer-term emotive brand building campaign running alongside targeted sales driven campaigns seem to be the most effective.
With Morecroft’s Numbers, this may mean an emotive and creative advertising campaign to the whole sector, where I would measure brand metrics such as awareness, image attribute and reach. I’d combine this with targeted campaigns to drive leads, sales or 30-day free trial subscriptions.
Field & Binet do provide a more nuanced calculation depending on your industry, age of business and other factors. The general message though is to ensure that brand building activities are just as, or even more, important than sales or lead driven campaigns.
So, should I target niche segments or go mass-market?
Three different heavy-weights in the marketing world suggest three different approaches: segmentation and targeting, sophisticated mass-marketing and the 60:40 rule. It’s ultimately a question of where your brand is in its life cycle, the market conditions and your timescale.
So, should you target niche segments or go mass market?
Well, it depends.
But, the answer for most people will lay in striking a balance.
Brandwerks is a marketing agency based in Brighton & Hove and London, UK.
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