Today I’d like to talk about the three types of markets your firm could possibly market to. It is important for advisory firms to first identify the type of audience they want to address so that they can adopt the appropriate marketing and messaging strategy.

First, there is the mass market. This is basically serving everyone who could benefit from the service and can pay the fees. This is the marketing the large national firms do. Their service is generally undifferentiated from their competitors. Think of the advertising you see for retail services at Schwab, TD Ameritrade, and Fidelity. Because the market is so big, the message they communicate is very general to appeal to as many people as possible. It is undifferentiated from the competitors, including you. For a boutique RIA, it is very hard to compete for the mass market because you are competing against companies with huge budgets, robust in-house marketing departments, and multiple award-winning advertising agencies working for them.

The second option is a segmented market. With this approach, you take the mass market and then break it down into different segments to market to. I refer to this as the law firm approach because this is the approach large law firms take. They have an overall brand but different practice areas to serve various market segments. For example, law firms will have industry sectors such as construction, real estate, and energy, or practice areas such as family law, mergers and acquisitions, and intellectual property. Visit any large law firm website and you will see how this approach works. Segmenting is an easier marketing approach than mass marketing since it does narrow in more on who you are trying to serve. The pitfall with this approach is that many small RIAs choose five or six different segments, diluting their efforts and message. For example, I commonly see firms segment into these five segments: pre-retirees, retirees, widows, business owners, and divorcees. If you have the staff to pull it off, great! But most firms have not put in enough effort into any one of these segments to pull it off. What ends up happening is they practically end up back in the mass marketing boat trying to capture all potential clients who could benefit from their service. To successfully pull off this approach, you should have one advisor dedicated to just one segment.

Finally, there is the niche market where you basically focus all of your efforts on just one market segment. You are able to differentiate your specialty from firms that are focused on mass markets. And because you are concentrating your efforts on one market, it is a less expensive and less time-intensive way to market. If you are a firm with only one or two advisors, this is generally the best approach to take, though larger firms also benefit from a niche approach.

Now that you know the three types of markets, which one does your firm market to? Would it make sense to change your approach depending on your size, capacity, and marketing budget? If you are considering a niche market approach, I invite you to visit our website at www.kaleidocreative.com to learn more about how we help firms select and market to a niche.