Much emphasis in marketing is given to segmentation strategies that break down large audiences into smaller target markets. While this technique does present a number of benefits, companies with broad target markets can also realize tangible and intangible advantages. Comparing the strengths of a broad market opportunity against those of smaller, niche segments is a key strategic dilemma.

More Total Customers

One of the simplest but most important benefits of a broad market is the ability to target a larger number of total prospects with a marketing campaign. The more total customers you reach out to, the higher your likelihood of making a sizable number of sales. Additionally, you can rely on the size of your target market to benefit you in future product and service offerings.

Media Flexibility

A key reason companies identify target markets is to decide what media to use for message delivery. With a broader target market, you may have to invest in more media types, but this also increases your flexibility. You can use various options, such as television, radio and billboards, which reach a large number of people. With a niche audience, these media would often not be worth the investment. However, they offer volume benefits in trying to appeal to a large market.

Higher Revenue and Cash Flow

Naturally, a larger target market increases your revenue and cash flow potential. If you have 100,000 customers in a market, it is reasonable to assume you would create more sales than with a 10,000-customer market, assuming other factors were equal. Strong revenue and cash flow also enables more investment in marketing research and new product development. This, in turn, further increases opportunities to attract customers and generate more sales. Plus, when you sell more goods, you can buy in larger volumes from suppliers, often leading to discounts.

Larger Safety Net

A larger target market also increases the safety for a company if it misses the market on a product launch. You can still expect to sell through a sizable amount of products with an established brand and market. On the contrary, a niche business may go under if it invests in a specialized product line that flops. Companies with broad markets can usually expect a product to appeal to some customers if it is of good quality and offers benefits desired by some people.