Market Segmentation

One way that companies use to single themselves out from the crowd it so focus on a specific niche or target market. This enables them to tailor their product or service to the needs of that particular niche. This specific tailoring can enable a company to charge a premium for their service; or simply to increase market penetration. Strategically a company can do this in one of two ways. They can either focus predominantly of that particular niche, or else they can divide the market up into particular segments and attack each one of them independently from the other.

I came across an interesting case earlier today. Backgammon Masters is a company that specialises in providing poker and backgammon games for people to play online. They have recently moved into the Latin American market by introducing an online version of a popular Spanish dice game called Perudo. The new market proved to be so popular that they have now opened new offices in Central America, to help them work closer with this segment and understand the cultural nuances better. So instead of just sticking with backgammon, this company has expanded into a new segment, which seems to be growing in quite a healthy fashion.

The important thing however, is to not spread yourself too thinly. In the case above, Backgammon Masters are using core competencies they have (online gambling, online delivery mechanisms, online payments etc) to move into a new market. They can all be managed under one umbrella and I believe that strategically this is a good move. Now to get back to studying …

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