Once you’ve evaluated your target market, you need to decide which market segment is most attractive to pursue. Focusing on this segment of the customer base will present you with the greatest opportunity to maximize sales. In targeting this set of customers, you should take into consideration the following questions:

1. What is the market growth potential? The higher the level of potential growth the more attractive the market will be. While Verizon has a great business in landline phone service, they know that the growth is in cell phones. Understanding this, they direct most of their resources to marketing their cell phone business. However, the higher the growth potential the more competition there will be.

2. What is the level of competition in the market? Existing businesses in the market will fight to keep their market share. This may cause a price war. Generally speaking, the higher the number of competitors the more you’ll need to invest in promotion.

Strategies to reach your market segment

How to Narrow Down Your Market SegmentOnce you’ve decided upon your target market segment, there are three basic strategies you can pursue: undifferentiated, differentiated, and niche.

1. Undifferentiated targeting. If your product is a commodity type (e.g., generic salt, bananas), your competitors are selling the same thing and you will have a hard time making it stand out from their offerings. Your only advantage may be a lower price. Most modern marketing experts have abandoned commodities. It is difficult to develop a product or brand that can satisfy all consumers. You may make some headway in differentiating it by clever packaging or perhaps warranty features, if applicable. Still, you will be vulnerable to competitors who sell a more specialized version of the product. But chances are, a small business’s product is not a commodity. Most small business products or services will satisfy specific wants and needs for different consumers.

2. Differentiated targeting. Sometimes a company decides to target more than one market segment by developing a different product for each. Using this strategy allows the small business owner to increase the customer’s level of satisfaction. If the product is more tailored to a specific type of customer, the customer is likely to perceive it as of superior value than a competing product not “tailor-made” for them.

Utilizing this strategy will require you to seek out areas where your product can stand out. However, it is not enough foryou to think that a particular product’s attribute will make a difference. The customer has to see it, too.

An example of this is Procter & Gamble. In the United States, P&G markets six different brands of laundry detergent (Tide, Gain, Cheer, Era, Dreft, and Bold). All compete with each other on the same supermarket shelves. They further segment the market with each of these brands. For example, you can get Tide in several versions: Tide Coldwater, Tide Pods, Tide Free & Gentle, Tide Plus Febreeze, or Tide Plus Downy. All of these are addressing a particular need that the consumer has described (through market research). The products are developed and marketed as having unique “benefits” that address these needs. In fact, with a quick glance at P&G’s website, you’ll notice that you can browse their product offerings by “benefit.”

How to Narrow Down Your Market SegmentAnd let’s not forget that each of these come in a variety of sizes, too! The size of the bottle is also part of the segmentation approach, as some consumers will want a small size, while others – such as large families – will want a giant size.

Each of these brands is purchased by consumers who perceive that they are getting a superior product because the brand they choose is tailored specifically for them. In differentiating this way, P&G gains a stronger position in each market segment and makes more sales.

If you find yourself having trouble identifying how your product can be different, or you cannot develop several different product offerings, you may want to incorporate a level of customer service that benefits the customer more than your competitor’s does. This is a characteristic that the online shoe retailer Zappos has used to establish a competitive advantage.

3. Niche targeting. Some consumers will have such specialized needs that they are willing to pay a higher price for an item. In niche marketing, you are selling a highly specialized and unique product to a large share of a very small segment. An example of this is As the name implies, they mainly sell ties, and they do so only online.

As compared to the giants of the supermarket industry like Kroger and Walmart, Whole Foods is relatively small. Yet, over the years, Whole Foods has managed to carve out a niche by selling mainly to affluent consumers who prefer (and can afford) organic foods.

Through this type of marketing, Whole Foods acquired a stronger market position because of its knowledge of consumer needs in this segment. It can market itself more effectively by fine-tuning its products, prices, and programs to these narrow segments. Niche marketing allows a small business to focus its limited resources on small enough segments that larger companies do not find worthwhile to pursue. Or, at the extreme, sometimes the larger company has overlooked the small segment entirely.

If you are pursuing a niche strategy, be aware of how large the market is. If it’s too small, it may not be substantial enough to be profitable.


How to Narrow Down Your Market SegmentIn the end, whichever strategy you pursue, remember that you always have options. As a small business owner, you may not be able to target many different market segments, but by segmenting just a bit, you may still gain a competitive advantage.

Focusing your efforts on the target market segments that are most valuable to you requires discipline. But that discipline will pay off as you concentrate on selling your brand to those who care most, and not wasting money advertising to consumers who wouldn’t be buying your product in the first place.

About the Author(s)

 Carlos  Ronisky

Carlos is a marketing consultant helping businesses create customer value and engagement, in a fast-changing digital and social marketplace.He uses his broad marketing background as an Adjunct Professor at the City University of New York (CUNY) and Southern New Hampshire University, where he teaches graduate and undergraduate courses in Marketing Management, Digital Marketing, and Strategic...

Adjunct Professor , City University of New York (CUNY)
How to narrow down your market segment