The special emphasis in marketing effort remains primarily on the development of strategies that will best match product offerings to the needs of particular target markets. An appropriate match between such offerings and needs is vital to the firm’s marketing success. Three basic strategies for market coverage or achieving consumer satisfaction are available to marketers which may be described as follows:
- Undifferentiated marketing or mass marketing or market aggregation strategy
- Differentiated marketing or multiple segment strategy
- Concentrated marketing or single segment strategy or niche marketing
- Full market coverage strategy.
1. Undifferentiated Marketing/ Mass Marketing/ Market Aggregation Strategy: This marketing strategy serves the entire product market i.e., all groups of customers or consumers with a single marketing mix offer. Undifferentiated marketing does not give any weightage to the differences among various customers and assumes that the firm’s marketing offer would appeal to almost all groups of customers. These firms undertake extensive advertising and build a large distribution network. Illustrations of Campa Cola (drink market), Brooke Bond, Lipton (Tea market), Hindustan Lever (personal wash market) etc. can be cited in this context.
Undifferentiated marketing provides cost economies, lower cost of production, inventory and transportation, lower cost of advertising, marketing research and product management. This is suitable to firms, that are marketing an Undifferentiated (i.e., staple used and needed in the house all the time) product, such as salt or sugar. In the eyes of many people ‘salt is salt’ or sugar is sugar. However, there are some inherent dangers in the undifferential marketing strategy.
Where a company attempts to satisfy everyone in the market with one standard product, it faces the threat of competitors offering specialized products to smaller segments of the total market and better satisfying each segment,
A company that uses undifferentiated marketing may also encounter problems in foreign markets.
2. Differentiated Marketing/ Multiple Segment Strategy: In this marketing strategy, a firm tries to serve different segments in the product market with a different marketing mix offer or program for each segment. Maruti udyog limited, General Motors, Pal Peugeo (all manufacturing cars), Videocon, Philips, BPL, Panasonic (all-electronics — TVs Music system etc.) design and develop different marketing mix offers and programs for different segments in their respective product markets. Colleges, universities and professional institutions offer different marketing mixes to different groups of students. This strategy is costly as it involves incurring a number of costs like production costs, promotion costs, administrative costs, inventory costs etc.
Differentiated marketing strategy usually results in a greater sales volume than Undifferentiated or single-segment strategy. It is also useful for a company facing seasonal demand. A firm with excess production capacity may well seek additional market segments to absorb this capacity.
However, differentiated marketing strategy has some draw backs also.
- Marketing expenses are increased in several ways advertising costs go up because different advertisements that may be required for each market segment distribution costs are likely to increase as efforts are made to make products available to various segments; developing separate marketing plans for the separate segments requires extra marketing research forecasting, sales analysis, promotion planning, and channel management.
- Total inventory costs go up because adequate inventories of each model, format, style or color etc. must be maintained.
- General administrative expenses go up when management must plan and implement several different marketing plans or programs. Thus, the company must weigh increased sales against increased costs when deciding on a differentiated marketing strategy. Despite the higher costs, a company may be forced into differentiated marketing in order to remain competitive.
- Marketing to multiple segments can be expensive in both the production and the marketing of products. Even with today’s advances in production technology it obviously is less expensive to produce mass qualities of one model and one color than it is to produce a variety of models, colors and sizes.
3. Concentrated Marketing/ Single Segment Strategy/ Niche Marketing: Rather than attempting to market its product offering to several market segments, a company may decide to focus its efforts on profitably satisfying only one market segment. Concentrated or niche marketing is that strategy which directs all the marketing resources of a firm towards serving a small segment of the total market as the target market, without taking on many competitors in the broader market. Concentrated marketing is especially appealing when company resources are more limited than those of their competitors.
Concentrated marketing provides an excellent way for small new business to get a fast hold against larger, i.e., more resourceful competitors. Through concentrated marketing, a firm achieves a strong market position in the niche or segment because it is enabled to penetrate one market in depth and to acquire a reputation as a specialist or an expert in this limited market. As long as the single segment remains a small market, large competitors are likely not to take interest in it. The firm also enjoys many operating economies because of specialization in production, distribution and promotion. If the segment is well chosen, the firm can earn a high rate of return on its investment.
4. Full Market Coverage Strategy: It implies that a firm tries to satisfy almost all the needs of all customer groups in product market. A firm needs extensive resources to cover the entire product market and so this strategy can be adopted by large organizations only. Hindustan Lever (soaps and personal care products), Pepsi cola (drink market), Telco (vehicles), Philips (electronics) are a few illustrations. These organizations cover the entire product market adopting two strategies viz., undifferentiated marketing and differentiated marketing.