Page 257 - Marketing Management

234 PART 3 CONNECTING WITH CUSTOMERS

MULTIPLE SEGMENT SPECIALIZATION With selective specialization,a
firm selects a subset of all the possible segments, each objectively attractive and
appropriate. There may be little or no synergy among the segments, but each
promises to be a moneymaker. When Procter & Gamble launched Crest
Whitestrips, initial target segments included newly engaged women and brides-to-
be as well as gay males. The multisegment strategy also has the advantage of
diversifying the firm’s risk.
Keeping synergies in mind, companies can try to operate in supersegments rather
than in isolated segments. A supersegment is a set of segments sharing some ex-
ploitable similarity. For example, many symphony orchestras target people who have
broad cultural interests, rather than only those who regularly attend concerts. A firm
can also attempt to achieve some synergy with product or market specialization.
• With product specialization, the firm sells a certain product to several different
market segments. A microscope manufacturer, for instance, sells to university,
government, and commercial laboratories, making different instruments for
each and building a strong reputation in the specific product area. The down-
side risk is that the product may be supplanted by an entirely new technology.
• With market specialization, the firm concentrates on serving many needs of a
particular customer group, such as by selling an assortment of products only to
university laboratories. The firm gains a strong reputation among this customer
group and becomes a channel for additional products its members can use. The
downside risk is that the customer group may suffer budget cuts or shrink in size.
Although P&G initially targeted
SINGLE-SEGMENT CONCENTRATION With single-segment concentration, the firm
very specific segments with its
markets to only one particular segment. Porsche concentrates on the sports car market and
Crest Whitestrips tooth-whitening
Volkswagen on the small-car market—its foray into the large-car market with the Phaeton was a
product, it later expanded both its
failure in the United States. Through concentrated marketing, the firm gains deep knowledge of the
product offerings and its target
segment’s needs and achieves a strong market presence. It also enjoys operating economies by
markets.
specializing its production, distribution, and promotion. If it captures segment leadership, the firm
can earn a high return on its investment.
A niche is a more narrowly defined customer group seeking a distinctive mix of benefits within a
segment. Marketers usually identify niches by dividing a segment into subsegments. Whereas Hertz,
Avis, Alamo, and others specialize in airport rental cars for business and leisure travelers, Enterprise
has attacked the low-budget, insurance-replacement market by primarily renting to customers
whose cars have been wrecked or stolen. By creating unique associations to low cost and convenience
in an overlooked niche market, Enterprise has been highly profitable.
Niche marketers aim to understand their customers’ needs so well that customers willingly pay
a premium. Tom’s of Maine was acquired by Colgate-Palmolive for $100 million in part because its
all-natural personal care products and charitable donation programs appeal to consumers turned
off by big businesses. The brand commands a 30 percent price premium as a result. 57
What does an attractive niche look like? Customers have a distinct set of needs; they will pay a
premium to the firm that best satisfies them; the niche is fairly small but has size, profit, and growth
potential and is unlikely to attract many competitors; and the niche gains certain economies
through specialization. As marketing efficiency increases, niches that were seemingly too small may
58
become more profitable. See “Marketing Insight: Chasing the Long Tail.”
INDIVIDUAL MARKETING The ultimate level of segmentation leads to “segments of one,”
Tom’s of Maine has developed “customized marketing,” or “one-to-one marketing.” 59 Today, customers are taking more
a very successful niche with its individual initiative in determining what and how to buy. They log onto the Internet; look up
all-natural personal care products. information and evaluations of product or service offerings; conduct
dialogue with suppliers, users, and product critics; and in many cases design
the product they want.
Jerry Wind and Arvind Rangaswamy see a movement toward “cus-
tomerizing” the firm. 60 Customerization combines operationally driven
mass customization with customized marketing in a way that empowers
consumers to design the product and service offering of their choice. The
firm no longer requires prior information about the customer, nor does it
need to own manufacturing. It provides a platform and tools and “rents”