Concentrated marketing

Concentrated marketing
A third market-coverage strategy, concentrated marketing, is especially appealing when
company resources are limited. Instead of going after a small share of a large market, the
firm goes after a large share of one or a few submarkets. For example, Oshkosh Trucks is
the world’s largest producer of airport rescue trucks and frontloading concrete mixers. Mills
& Boon, which has grown to be one of the world’s most successful publishers, targets its
inexpensive romantic novels at women in search of romance. The company has researched
and knows its market:
n Having the word ‘wedding’ in a book title guarantees higher sales.
n The heroine is often plain, not gorgeous, to promote reader identification: ‘no oil
painting in the way of looks’; kind and polite and pleasant and unobtrusive. And best
of all, homely.
n The best settings for the story are a hospital or an aircraft (lots of chance for life or death
action); doctors and pilots are the best heroes.
n The novels always end happily.32
Like Mills & Boon, through concentrated marketing, a firm can achieve a strong market
position in the segments (or niches) it serves because of its greater knowledge of the segments
and its special reputation. It also enjoys many operating economies because of specialisation
in production, distribution and promotion. A firm can earn a high rate of return on its
investment from well-chosen segments.
At the same time, concentrated marketing can involve higher than normal risks. A
particular market segment can turn sour. For example, when the 1980s boom ended, people
stopped buying expensive sports cars and Porsche’s earnings went deeply into the red.
Another risk is larger competitors entering the segment. High margins, the glamour and lack
of competition in the sports car market has attracted Mazda, Toyota and Honda as powerful
competitors in that market. Fashion changes can also damage the niche’s credibility. The
yuppies who made Porsche’s fortunes in the 1980s are over the recession, but have grown up
and now have kids and a different lifestyle. Big, chunky, luxuriously appointed 4 × 4 land
cruisers or people carriers are what they want now.