Volkswagen concentrates on the small-car market. Stay in one target market for you product. Risk though, as a competitor entering a market could sour your market share. Polaroid had this happen.
A firm selects the number of segments, each objectively attractive and appropriate. Diversifying risk like Proctor and Gamble
The firm makes a certain product that it sells to several different market segments. A microscope manufacturer can sell to hospitals, universities, and government labs. New technology could hurt these companies.
The firm concentrates on serving many needs of a particular customer group. A firm can sell an assortment of products only to university laboratories. Gains a strong reputation in that customer group. If that group gets budget cuts, the company will be hurt.
The firm attempts to serve all customer groups with all the products they might need. General Motors and Coca Cola try to offer a product range to serve everyone.