Advantages: Concentration of resources, Can better meet the needs of a narrowly defined segment, Allows some small firms to better compete with larger firms, Strong positioning
Disadvantages: Segments too small or changing, Large competitors may more effectively market to niche segment
With a concentrated targeting strategy , a firm selects a market niche (one segment of a market) for targeting its marketing efforts. Because the firm is appealing to a single segment, it can concentrate on understanding the needs, motives, and satisfactions of that segment's members and on developing and maintaining a highly specialized marketing mix. Some firms find that concentrating resources and meeting the needs of a narrowly defined market segment is more profitable than spreading resources over several different segments.Intelligentsia, a Chicago-based coffee roaster/retailer, targets serious coffee drinkers with hand-roasted, ground, and poured super-gourmet coffee or tea served by seriously educated baristas. The company also offers training classes for the at-home or out-of-town coffee aficionado. Starting price—$200 per class. America Online became one of the world's leading Internet providers by targeting Internet newcomers.Small firms often adopt a concentrated targeting strategy to compete effectively with much larger firms. For example, Enterprise Rent-A-Car rose to number one in the car rental industry by catering to people with cars in the shop. It then expanded into the airport rental market. Some other firms use a concentrated strategy to establish a strong position in a desirable market segment. Porsche, for instance, targets an upscale automobile market through “class appeal, not mass appeal.”Concentrated targeting violates the old adage “Don't put all your eggs in one basket.” If the chosen segment is too small or if it shrinks because of environmental changes, the firm may suffer negative consequences. For instance, OshKosh B'gosh was highly successful selling children's wear in the 1980s. It was so successful, however, that the children's line came to define OshKosh's image to the extent that the company could not sell clothes to anyone else. Attempts at marketing older children's clothing, women's casual clothes, and maternity wear were all abandoned. Recognizing it was in the children's wear business, the company expanded into products such as kids’ shoes, children's eyewear, and plush toys.A concentrated strategy can also be disastrous for a firm that is not successful in its narrowly defined target market. Before Procter & Gamble introduced Head & Shoulders shampoo, several small firms were already selling antidandruff shampoos. Head & Shoulders was introduced with a large promotional campaign, and the new brand captured over half the market immediately. Within a year, several of the firms that had been concentrating on this market segment went out of business.