Concentrated Marketing

A third market-coverage strategy, concentrated marketing, is particularly appealing when company resources are restricted. Rather than going after a small share of a large market, the firm goes after a large share of one or a few segments or niches. Nowadays, on the Internet, the low cost of setting up shop makes it even more profitable to serve seemingly minuscule niches. Concentrated marketing gives an outstanding way for small new businesses to obtain a foothold against larger, more resourceful competitors. Throughout concentrated marketing, firms gain strong market positions in the niches or segment they serve because of their higher knowledge of the segments' needs and the extraordinary reputations they gain. They also enjoy various operating economies because of specialization in distribution, production and promotion. If the segment is well selected, firms may earn a high rate of return on their investments.

At the same time, concentrated marketing involves higher-than-normal risks. The specific market segment may turn sour. Or larger competitors can decide to enter the same segment.