Concentrated Marketing

Concentrated Marketing Strategy Characteristics

Concentrated marketing strategy is a strategy where companies focus on one specific market segment and tailor their marketing mix to meet that group of customers' unique needs. In this list, we'll explore the main characteristics and features of concentrated marketing, including its focus on problem-solving, adoption by smaller firms, and emphasis on building strong customer relationships:

• Serving one single market - Concentrated marketing focuses marketing efforts on one specific market. It finds a problem other companies overlook and provides a solution to it, thereby creating a new market.

• Adopted by smaller firms - Companies that adopt concentrated marketing tend to be small or at the beginning of their journey. By narrowing down the customer base, they can save marketing time and effort while building strong customer relationships.

• Focusing on problem-solving - Unlike undifferentiated marketing (mass marketing), where firms have to compete in nitty-gritty details to capture a larger market share, concentrated marketing focuses on communicating the core value of the business - "what problem does it solve?", "how would their life be different if they used the service?"

Concentrated Marketing Examples

Here are three examples of companies using concentrated marketing:

• Warby Parker - An eyewear company that offers affordable, stylish glasses and sunglasses. Their marketing campaigns are targeted towards millennials who value both fashion and affordability. By focusing on this specific group of customers, they have disrupted the eyewear industry and gained a loyal following.³
• Dollar Shave Club - A subscription-based razor blade delivery service for men. Their marketing campaigns and products specifically target men tired of spending a fortune on razors. By catering to this specific group of customers, they have been able to build a loyal customer base and compete against larger brands like Gillette.⁴
• Peloton - A fitness technology company offering high-end exercise equipment, including bikes and treadmills, and live and on-demand fitness classes. Their marketing campaigns are targeted towards affluent consumers who are looking for an interactive and convenient workout experience. By focusing on this niche market, Peloton has become a disruptor in the fitness industry and has seen tremendous growth in recent years.⁵

If these examples are not enough, below are more detailed analyses of concentrated marketing strategies in sports tourism and remote workers markets.

Concentrated marketing example: Sports tourism

Sports tourism is a niche market in the travel industry. It involves people traveling from one destination to another to participate in or witness a sporting event. The target customers of this market include professional athletes/officials attending tournaments and sports fans worldwide.¹

Fig. 1 - Sports fans at a basketball arena

People travel for many reasons: to create, explore a culture, visit a famous landmark, or simply have a good time with their family and friends. The tourism industry thrives by recognizing these diverse needs among travelers and tailoring tourism products/services to meet these needs.

As you might be aware, the location of a sports tournament tends to alternate between countries around the world. For example, FIFA World Cup is held every four years in a new country. This change prevents favoritism and allows all economies to boost their tourism and national income. Income streams are from multiple sources, such as ticket sales, tourist accommodation, and sightseeing.

Within sports tourism, there are even smaller markets:

• Professional players, coaches, and officials who participate in a tournament,

• Sports fans who fly from their home country to watch a sports league (e.g., World Cup, Olympics),

• Amateur athletes and hobbyists who want to participate in local sporting activities such as mountain biking, skiing, kayaking, etc.

Each of these niches would have different tourism needs. For example, sports fans would look for a place to stay and some activities to occupy themselves when not watching sports, whereas active sports participants would need extra services like gear, trainers, guides, etc.

Concentrated marketing example: Remote workers

More and more companies are going digital, whether through a hybrid mode (office and remote) or as a fully remote option. Remote working offers convenience and freedom but also comes with many challenges, such as lower motivation, lack of equipment, communication, etc.

These challenges are great opportunities for businesses to practice concentrated marketing. For example, companies can work in a niche that helps people:

• Build a perfect office,

• Manage time more efficiently,

• Collaborate in real-time with other colleagues.

Fig. 2 - Remote worker using apps to communicate with coworkers

Advantages of Concentrated Marketing

Concentrated marketing goes for the smallest market possible with the most revenue-generating opportunities. This approach comes with several advantages:

Reduces costs

Concentrated marketing can help reduce costs associated with marketing efforts. By targeting a specific market, companies can develop a marketing campaign tailored to that group of people, which can be more cost-effective than a mass marketing campaign.

Reduces competition

Niche marketing allows the company to focus on niche markets with fewer competitors and potentially capture a larger market share.

First-mover advantage

Companies can use niche marketing strategies to position themselves as experts and leaders in their particular fields.

Builds stronger brand loyalty

Concentrated marketing strategy tailors products and services to customers' specific needs, leading to stronger customer relationships and increased brand loyalty.

Allows higher profit margins

A concentrated marketing strategy allows for higher profit margins, as companies can set prices without competing with larger, more established brands in the same market. Additionally, if the company's product or service is exclusive, customers will be willing to spend extra on them.

Disadvantages of Concentrated Marketing

Concentrated marketing allows smaller companies to avoid competition and maximize their profit potential. However, it also has some disadvantages:

Difficulty finding small niches

Finding a small, untapped market can be challenging, and locating them can take a lot of time and resources. With concentrated marketing, companies must identify a unique problem that has not been solved by other companies, and that requires specific knowledge of the market.

Unprofitable small markets

When the market is too small, it may not generate enough revenue to cover the costs of production, marketing, and sales. Therefore, a company that adopts a concentrated marketing strategy must have strong sales skills and the ability to generate high profits with fewer customers.

Wrong targeting

In concentrated marketing, it's essential to target the right customers accurately. If a company focuses on the wrong market, it can result in poor sales performance and lower conversion rates. Thus, companies using concentrated marketing must conduct thorough research and analysis to ensure they're targeting the right audience.

Difficulty communicating with small groups

When targeting a small market, it can be difficult to communicate with them effectively. Due to the limited size of the market, there may not be enough information available about the customer's preferences and buying habits. Therefore, companies using concentrated marketing must find creative ways to connect with the customer base.

Limited growth potential

Due to the market's small size, the growth potential can be limited. As a result, companies must have a well-developed plan for expansion or diversification to continue to grow their business.

What is the Difference Between Differentiated and Concentrated Marketing?

The main difference between differentiated and concentrated marketing is that concentrated marketing targets one specific market with a specialized product/service, while differentiated marketing targets multiple markets with different products/services.

Differentiated marketing focuses on two or more segments of the market. Its purpose is to diversify the customer portfolio and maximize potential sales. Companies that adopt differentiated marketing strategies often have various product lines.

Concentrated marketing, on the other hand, only focuses on one market segment. The goal is not to diversify the customer portfolio but to niche down and build loyalty within one particular customer group. Concentrated marketing seeks to develop strong connections with customers.

Companies adopting concentrated marketing tend to be smaller or at the beginning of their journey. The lack of resources is their biggest motivation to go specific since smaller markets mean less competition and a lower marketing budget. When companies get bigger, it's harder to niche down as they need to be generalists.

One thing that concentrated and differentiated marketing have in common is personalized marketing campaigns. Marketing ads and content must resonate with the chosen segment the company targets.

We hope that this explanation has helped you gain a better understanding of concentrated marketing. Before you go, why not take our quiz to test your knowledge on this topic?