5 Targeting Strategies for Small Businesses to Zero in on Customers and Boost Sales (and the greatest venture that never was)

Now that we’ve covered segmentation (understanding our customers, their behaviors, values, and similarities), it’s time to take the next step: targeting. It’s not enough to know who your customers are—you need to decide which ones to focus on. And trust me, not all customers are worth your time and resources. Targeting is about zeroing in on the most attractive segments where your business has the best shot at success. It's about picking your battles and making sure you're not spreading yourself too thin. Whether you’re a local business owner looking to boost sales or a startup ready to make your mark, having the right targeting strategy is key to growing your customer base.

Just because you identify a group to target doesn’t mean you stop servicing other groups entirely—it just means you're focused on where the growth potential is strongest.

In 2020, I took on a consulting client with a stellar concept, a functional MVP (minimum viable product), and a compelling story to sell. The business relied on partnerships with non-profits and local businesses: customers paid for access to a mobile app offering discounts and free items at local businesses, and half the proceeds from the app subscription would go to a local non-profit. If you’re thinking, "Wait, isn’t this just a digital version of those local discount cards kids sell for school fundraisers?"—you’re absolutely right. But it was better. The app had no geographic limitations, so you could buy it in Chicago and still use it in Denver. Plus, it gave more money back to schools while eliminating the door-to-door sales strain on students.

On paper, it was a slam dunk. But we made one critical mistake: the business owners were unwilling to identify a clear target market. They were afraid that focusing on schools—where the concept already had traction—would mean missing out on sales from other non-profits. I pleaded with them to target schools, where people already understood the product and where the enhanced features would make for an easy sales pitch. These schools were meeting with fundraising card reps anyway, so why not meet with someone who could offer them more?

But instead of focusing our limited resources on a proven path, we spread ourselves thin across different non-profits, chasing everyone but mastering none. And ultimately, the venture failed. We parted ways, frustrated that such a fantastic idea couldn’t get the traction it deserved.

This is why targeting matters. You have to focus on the customers who give you the best chance of success, even if it feels like you’re leaving potential sales on the table. So, let’s break down the different targeting strategies and walk through an example to help you avoid the same pitfalls.

1. Undifferentiated Targeting (Mass Marketing)

What it is: Treats the market as one big audience without segmenting it. One size fits all. Why it works: If your product appeals to a broad audience, this can be an efficient and cost-effective way to reach everyone at once. Best for: Basic, mass-appeal products like utilities, fast food, or household staples.

2. Differentiated Targeting (Segmented Marketing)

What it is: Targets multiple segments with different messaging for each one. Why it works: Allows you to cater to different needs and preferences within your audience, making your business more adaptable. Best for: Businesses offering a range of products or services, like clothing brands or restaurants with varied menus.

3. Concentrated Targeting (Niche Marketing)

What it is: Focuses all your resources on one specific segment. Why it works: By concentrating on a niche, you can become the go-to expert or provider for that group, dominating a smaller but highly profitable market. Best for: Specialized businesses like boutique shops, artisanal products, or high-end services.

4. Micromarketing (Local or Individual Marketing)

What it is: Targets a very specific group of people, sometimes down to the individual level. Why it works: Ultra-focused targeting ensures your message speaks directly to the needs of your audience, creating higher engagement and conversion rates. Best for: Local businesses, personalized services, or businesses serving a distinct community or neighborhood.

5. Retargeting (Behavioral Targeting)

What it is: Targets customers who’ve already shown interest in your product by visiting your website or interacting with your brand online. Why it works: Customers who are already familiar with your business are much more likely to convert, making retargeting highly effective. Best for: E-commerce businesses, online service providers, and businesses with digital marketing channels.

Concentrated Targeting Strategy Example:

Let’s say you run a company that sells eco-friendly baby products, like organic cotton diapers and baby clothes. Rather than targeting all parents, you decide to focus exclusively on environmentally-conscious, first-time parents in your marketing efforts. This means you’re zeroing in on a niche market that has a clear demand for sustainable products. Your goal is to become the go-to brand for this specific group by offering products that align with their values.

How to Identify a Niche Market for Concentrated Targeting:

1. Define a Specific Problem or Need: Start by identifying a particular problem or need that your product solves for a smaller group of people. Concentrated targeting works best when you’re addressing a very specific pain point. In our example, the pain point is the environmental impact of conventional baby products.
2. Look for Underserved or Passionate Markets: Find a group that is not only passionate but may feel underserved by mainstream brands. These markets often offer great potential because they’re looking for specialized products or services that larger companies may not be catering to.
3. Research Competitors in the Niche: Explore who else is targeting this specific niche. If there are a few smaller competitors but none of the big players are dominating, that’s a good indicator that you’ve found a viable niche. You can stand out by doubling down on your specific value proposition.
4. Leverage Your Unique Value Proposition (UVP): Make sure that your brand’s UVP aligns with the niche market’s needs and values. You’ll want to tailor your messaging to this audience in a way that speaks directly to their priorities and pain points.

Concentrated Targeting in Action:

In this example, instead of trying to compete with every baby product company out there, you focus exclusively on environmentally-conscious first-time parents. Your marketing message is all about sustainability, health, and reducing waste. You can target this group through:

• Partnerships with eco-friendly parenting blogs or influencers.
• Ads in publications specifically aimed at environmentally-conscious consumers.
• Social media campaigns focused on new parents who are searching for sustainable alternatives.

By narrowing your focus, you can become the go-to provider for eco-conscious parents who care about making ethical choices for their babies.

Case Study: Burt’s Bees Baby

A perfect example of concentrated targeting success is Burt’s Bees Baby, a brand that focuses on eco-friendly, organic baby products. They didn’t try to compete with larger companies selling generic baby products. Instead, they identified a niche market of parents looking for sustainable, chemical-free, and organic baby goods. By concentrating on this segment, they’ve been able to carve out a strong reputation as a trusted provider in the eco-friendly baby product space.

Proof of Success:

• Brand Loyalty: Burt’s Bees Baby has built a loyal customer base that seeks out their products for their commitment to sustainability.
• Market Share: They’ve captured a significant portion of the eco-friendly baby product market by focusing solely on this niche, and their product line continues to grow.
• Customer Perception: They’ve positioned themselves as a premium brand, and customers are willing to pay more for products that align with their values.

Concentrated targeting allows you to be the expert in a niche market, and that kind of authority leads to strong customer loyalty and growth. Just like Burt’s Bees Baby, your business can thrive by focusing on a specific group, addressing their unique needs, and creating a message that resonates deeply with them. Remember, bigger isn’t always better—sometimes, specializing in one area gives you a stronger foothold than trying to be everything to everyone.

Stay tuned as we continue the STP journey and break down how positioning can help you lock in those hard-earned customers.