Primary Targeting Considerations

A firm needs to put careful thought into which segments it chooses to target. There are likely to be segments that have not been focused on by other competitors, but it is important to determine if gaps in the market are due to considerations that cannot be overcome. For instance, a segment might be so price sensitive that it is not possible to make a profit at such a low price point no matter what volume can be achieved. Other segments might be so expensive to market to (whether through product development, advertising costs, etc) that the company cannot break even. Barriers to entry might be such that in order to break into a specific market segment.  For instance, if a company wanted to get into oil production in developing countries, the governmental, political and environmental considerations would be so great that it would not be a likely success. The same could be said for hypertension pharmaceuticals, a new entry into the blood pressure market would most likely face extreme regulatory oversight and fierce competition from established pharmaceutical companies.

The strength of competitive firms in the market place also needs to be taken into account. Strong and established competitors can often easily copy innovations (while addressing patent/copyright concerns) and use its financial resources, consumer loyalty and overall position in the market to squeeze out new entrants or competitors. Sometimes smaller more tightly defined segments can be more successful for new entrants as innovations and superior services at such a niche level are often not large concerns for big conglomerates.

While it is perfectly fine for a company to choose to pursue multiple market segments, it would be important to consider if there are any synergies that can be achieved across segments. If synergies are possible, market segments might be more attractive then they would have been on their own. For example, in The Fashion Channel case, there might be significant overlap in the type of programming that would be appropriate for Fashionistas as well as Planners & Shoppers. Both groups like to stay up to date on trends and enjoy shopping. While each segment would need separate thought and focus, by targeting multiple segments that have commonalities, a company can stretch its resources and expertise across segments that are worthwhile. In The Fashion Channel case, on its own, the Fashionista segment might be too expensive to pursue, but by also targeting the Planners & Shoppers, the channel might have more opportunity for growth in both viewership and advertising revenue.