choose your marketing weapon
On the other hand, a rifle brings things into focus, takes a careful aim, and then only you pull the trigger. ‘Rifle marketing’, thus, typically involves selecting target audience based on their demonstrated interest.
So, which weapon you want to choose? Both the approaches have their benefits, but it seems that the rifle approach is the better one for the resource-challenged Small and Medium Enterprises (SMEs).
In today’s diverse market, it is not possible for a SME to serve all buyers in the entire market even for specific product or service category. The reason is simple: buyers today are too numerous, too widely spread, with too different needs. Therefore, rather than competing in an entire market, SMEs should identify small parts of the market that they can serve in a more meaningful way.
Historically speaking, the target market approach has never been popular with Indian businesses. They have, over the years, engaged in mass marketing to produce a single product on a mass scale and distribute and promote the product on a mass level. But with the changing scenario of the market, marketers today need a ‘rifle approach’ to identify different sub-markets, select one or more of them, and put a concentrated effort in them.
Now, the question is how can we segment a market and on what basis. There is no single way to segment a market. It depends on the firm which is marketing its products; it has to find out different segmentation variables and choose the best one to address the specific condition of the target market. Another important point is that the strategy of market segmentation differs depending on whether a business is dealing with consumer market or business market.
Firms dealing with end consumers, usually the following bases are used in segmenting customers:
- Geography: The market is divided on the basis of location which may be of any level, like urban, hills or plains, climate, etc. The reason behind such segmentation method is that people who live in the same area usually share some similar needs and wants.
- Demography: In this type of segmentation, bases such as age group, family size, gender, occupation, education, religion, race, social class are considered. With most companies, this is the most preferred method as consumer wants and preferences are, often highly associated with their demographic characteristics.
- Physiography: Consumers do not buy products purely on the demographic variables. Therefore, marketers need to go beyond demographic attributes and engage in psychological segmentation, which involve examining attributes such as personality, and lifestyles of the target customers. A combination of demographic and physiographic segmentation often results great.
- Behaviour: While using this base, customers are segmented based on their knowledge, attitude towards use of or response to a product. Consumers, in this method, can be segmented as light user, medium user or heavy user, positive, indifferent or negative, etc.
In addition to the above, a firm can use different segmentation variables like sociocultural variables, use-related characteristics, use-situation factors, benefits sought, etc. for segmenting a market.
Business marketers, can use many of the same variables in segmenting the consumer markets. However, it is important to go for some specific segmentation approaches for business markets, such as:
- Customer type: Business markets can be segmented based on the end users. For example, a small business manufacturing electric motors may have a broad customer base in industries like automobiles, departmental stores, etc. But the firm will do better if it chooses the most potential segments from them and concentrating marketing efforts for customers from those segments.
- Customer size: Business customer can be divided as per their size of business. For example, a SME selling iron casting products can mark large and reputed companies as major accounts while small customers can be be grouped under minor accounts. According, different strategies and different level of efforts can be put to handle these different groups of customer.
- Type of buying: Also, a firm can divide its business customers based on the type of buying exhibited by its customers. Buying situations differ from customer to customer. Situations like new buy, modified rebuy, and straight rebuy are different from each other in a significant way. A better understanding of these buying situations can help a firm significantly to prepare their strategy more efficiently.
Thus, a product market for a firm, both dealing with end consumers or business customers, can be divided into various markets or segments. But still after that most small and medium businesses find such segments large enough to serve effectively. In such situation, niche marketing could be a better approach for them to sub-group the market segments further.
Niche marketing is marketing strategy where a marketer targets a smaller sub-segment within a market segment. In other words, this approach is more focussed – marketers tailor their products as per the needs of a small group of customers but, at the same time, they do not customize their offers to each, individual customer.
The niche marketing strategy, which is ideal for a SMEs to survive in a market populated with strong and big industry players, is based on a narrow competitive scope. It means a market niche is chosen where customers have distinct preferences and a competitive advantage can be achieved by optimizing strategy for the target segments. For example, a firm can seek a cost advantage in the target segment or it may look for differentiation in the target segment.
Whether it is segment marketing or niche marketing, a modern day business enterprise must bring differentiation and focus to stay ahead of competitors at least in some aspects; it must be unique in the industry in one way or another; it must have a focussed area to concentrate. Small players can hardly imagine of changing the rule of the game, so they must play smart with the right marketing weapon.