Bringing a product to market isn’t easy, especially in a sector as saturated as tech.
With more companies comes more competition and a greater need to set yourself apart. If tech companies are to make it in their market, they must know who they’re going to target and develop a market targeting strategy to do so in a unique way.
Will your strategy focus on appealing to the masses, or will you zero in on a smaller, niche audience? The answer will shape your marketing campaigns, messaging, and positioning. Understanding all the possible approaches—along with their pros and cons—is crucial to choosing the right path forward.
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The Four Main Targeting Strategies
It’s important to distinguish between selecting a targeting strategy and identifying your target market, as these are two related but distinct concepts. Identifying your target market involves determining who your potential customers are, based on factors like demographics, behaviour, and needs. This step focuses on defining the specific group or groups that are most likely to benefit from your product or service.
On the other hand, a targeting strategy is about how you choose to engage and reach those identified groups. Once you know who your target market is, your targeting strategy dictates whether you’ll approach them broadly or narrowly, and in what manner. This decision influences your marketing message, the channels you use, and how you position your product in the market. By choosing the right targeting strategy, you can maximise your impact and resources, ensuring your efforts align with your business goals and the specific needs of your audience. For more detailed insights on how to identify and define your target market, read our comprehensive blog post here.
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1. Undifferentiated Marketing (Mass Marketing)
Undifferentiated targeting occurs when the business views the target market as a homogenous group. This leads to a mass marketing strategy that is intended to appeal to as many people as possible without many differences.
In theory, this would yield a larger number of sales for the business, as they are reaching the largest audience and exposing as many people to the product as possible. While undifferentiated targeting works well for products with a universal appeal such as food or toiletries, for technology businesses with a more nuanced target market, such a widespread approach isn’t likely to pay dividends.
Tech audiences usually have a specific problem that the technology promises to provide a solution for, so there are more than likely various target segments with the market. Therefore companies following this targeting strategy are ignoring the market segmentation and run the risk of being undercut by competitors with more targeted campaigns.
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2. Differentiated Marketing (Multi-Segment Targeting)
A differentiated targeting approach can be effective to tackle the segmentation issue. This strategy involves the company providing separate offerings to different segments of its audience. It allows companies to create products and offerings that actually stand out and appeal to a unique need from their target segment. Apple, for example, uses a differentiated marketing strategy by continuously differentiating their products over the years through product design and new features.
The main benefit of this strategy is building a consumer base loyal to your brand and being less susceptible to competitors outperforming you. The downside, however, is that it can take a long time to form and execute a differentiation strategy, as it requires extensive research, testing, and implementation.
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3. Concentrated Marketing (Niche Marketing)
A concentrated marketing strategy targets only one of a few very specific segments of the target market. If done well, it can result in a huge boom in sales, boosting profitability all around.
For example, a tech company offering a specialised software solution for a particular industry, such as legal tech, might focus solely on law firms with specific automation needs. By tailoring its messaging, product features, and customer service to address the unique challenges faced by legal professionals, the company can establish itself as a market leader in that niche. This laser-focused approach allows the business to deliver greater value and build a loyal customer base, while also creating a strong brand identity within the segment.
However, the main and potentially crushing downside is that this approach is risky. A niche marketing strategy requires demand from that small market to be robust and consistent. If demand drops off, the company can be left vulnerable, having invested all its resources in serving that one segment. To mitigate this risk, businesses should continuously monitor market trends and customer needs, and be prepared to diversify by expanding into adjacent niches or developing complementary products and services. This way, they can maintain flexibility and reduce their dependency on a single segment.
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4. Customised Marketing (One-to-One Marketing)
Popular in B2B markets or personal service sectors, customised marketing refers to targeting individual consumers.
Companies who practice this type of targeting strategy usually deal in high-value products or services, where there is a customer they need to serve individually. Products are designed and developed to suit each customer’s specific needs, making their experience a special one, and boosting the chance of a high return for the company.
Customised marketing offers significant advantages, particularly in high-value B2B tech and service sectors. It allows businesses to provide tailored solutions that enhance customer satisfaction, build loyalty, and justify premium pricing. This personal approach also sets companies apart from competitors by offering a more intimate, bespoke experience, which can lead to long-term relationships and higher profit margins.
However, the strategy comes with challenges. Customised marketing is resource-intensive, involving higher costs and time investments, and it can be difficult to scale as the business grows. Additionally, focusing too much on individualised solutions can create operational complexities and make the business vulnerable to shifts in demand from key clients.
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How to Identify the Best Targeting Strategy for Your Business
To summarise, there are four main targeting strategies for tech companies, each with unique benefits and challenges:
- Undifferentiated Marketing: Broad reach but limited personalisation.
- Differentiated Marketing: Targeting multiple segments with tailored offerings.
- Concentrated Marketing: Focusing intensely on one niche segment.
- Customised Marketing: Individualised targeting for high-value customers.
But how do you know which of the four targeting strategies suits your business best?
Choosing the right targeting strategy requires careful analysis of your business, market, and customers. Here are some key considerations to help you determine the best approach for your needs:
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1. Understand Your Market and Customers
Begin by researching your market and understanding the characteristics of potential customer segments. Look at factors such as demographics, behaviors, needs, and preferences. Identify pain points that your product or service addresses and assess which segments are most likely to benefit. This research will help you determine whether you need a broad or narrow approach.
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2. Assess Your Business Goals
Your business goals play a significant role in choosing a targeting strategy. Are you aiming for rapid growth and broad market penetration, or do you want to establish a leadership position in a niche market? For companies aiming to grow quickly, undifferentiated or differentiated marketing may be a good fit. For those looking to establish expertise in a niche, concentrated or customised marketing may be more appropriate.
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3. Analyse Your Resources and Capabilities
Each targeting strategy requires different levels of resources and capabilities. Undifferentiated marketing may require larger budgets for broad campaigns, while differentiated and customised marketing require in-depth research and personalisation. Assess your company’s resources, including budget, manpower, and technological capabilities, to determine which strategy is feasible.
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4. Test and Measure
Testing is crucial in determining the effectiveness of your targeting strategy. Start by conducting smaller-scale campaigns to different segments, then measure their performance. Look at metrics like engagement, conversion rates, and return on investment (ROI) to see what works best. By testing, you can identify which segments respond positively and adjust your strategy accordingly.
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5. Consider Market Trends and Competitor Analysis
Keep an eye on market trends and competitor activities. Understanding how competitors are positioning themselves can help you identify opportunities to differentiate your offering. Market trends can also provide insights into emerging segments that may be worth targeting.
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6. Be Flexible and Ready to Adapt
No targeting strategy is set in stone. As your business grows and market conditions change, be prepared to reassess and adapt your targeting strategy. Regularly gather customer feedback and analyse campaign performance to identify areas for improvement.
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Seek Professional Guidance
This is where putting your trust in the hands of a professional can be a revelation. Here at Sales for Startups, our team of experts can analyse your startup and advise what target strategy suits you best. Book a call and let us help you begin your sales & marketing journey with confidence!