Beyond Segmentation Beyond Segmentation

Raynor, Michael E.; Weinberg, Howard S.
November 2004
Marketing Management;Nov/Dec2004, Vol. 13 Issue 6, p22
This article relates the difference between the concepts of niche and foothold in market segmentation. Market segmentation is among the most powerful weapons in the marketing arsenal. Competitors leave themselves open to crippling attack when their products or services lump together groups of customers with different needs that are better met by different value propositions. Identifying segments where others see an undifferentiated mass market creates opportunities for innovations based on meeting specific customers' needs more precisely. Fulfilling any particular segment's needs is optional, based on a company's business strategy. Indeed, to many, choosing which segments to serve and which to avoid is the essence of business strategy. The segments are called niches because serving one well seems to preclude serving the other. There are inevitable trade-offs between providing the kind of service demanded by, for instance, more affluent segments and being able to keep prices within reach of less wealthy customer groups. Strategies based on either a niche or a foothold can be spectacularly successful. But experience shows that it's only too easy to mistake each for the other, and the results either way can be disastrous. If a company has a niche and thinks it's a foothold, they not only fail to grow, but also might destabilize a perfectly good business. And settling for a niche when a foothold has been found means forgoing the kind of growth and profitability most business people never experience firsthand.


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