Types of Marketing
The main types of marketing are:
Undifferentiated Marketing
Undifferentiated Marketing does not provide for dividing the market into segments. The company ignores the differences between market segments and enters the market as a whole with one offer, focusing its attention and efforts on the common needs of customers that unite them, and not on what distinguishes them. This means reaching as many customers as possible.
Advantages:
- a limited range of goods ensures a low level of costs for production, inventory and transport.
- an undifferentiated program of advertising events allows you to keep their costs low.
- the lack of segmentation also determines the low level of costs for marketing research and development of new products.
Flaws:
- it is difficult to develop a product or brand that can satisfy all or at least the majority of consumers.
- When several firms focus their efforts on the largest segment of the market, the inevitable result is fierce competition.
- large segments may become less profitable as a result of price wars.
It originated in the 60s, when market segmentation became the most important attribute of marketing. Using a differentiated marketing strategy, the company focuses its activities on several market segments and develops separate offers for each of them.
Advantages:
- differentiated marketing, as a rule, gives greater turnover than undifferentiated marketing.
Flaws:
- you have to develop marketing plans, conduct market research, make forecasts, analyze turnover, development plans and advertising for each brand and market segment separately. Consequently, an increase in turnover leads to an increase in costs.
The point is to deepen the target character not in all market segments, but in one (several) of them. Instead of seeking a small share of a large market, the firm seeks a large share of one or more small markets. Particularly attractive to companies with limited resources. By resorting to concentrated marketing, firms achieve a strong market position in the segments they serve due to better knowledge of the needs of those segments.
Advantages:
- the company saves on operating costs due to the specialization of production, distribution and promotion of the product
- if the company has chosen the segment well, it will achieve a high return on invested capital
Flaws:
- concentrated marketing carries a lot of risk.
- the selected market segment may suddenly shrink.
For these reasons, many companies choose to operate in two or more markets simultaneously.
Choosing the type of marketing should be carried out taking into account the following factors:
Company resources. If a company's resources are limited, concentrated marketing is the smartest strategy.
The degree of homogeneity (homogeneity) of the product. A more suitable strategy for homogeneous products is undifferentiated marketing. Products with distinct designs, such as restaurants and hotels, are more suitable for a differentiated marketing strategy.
Phase life cycle product. When a firm introduces a new product to the market, it is wise to launch only one version of it. Most intelligent types Marketing here will be undifferentiated or concentrated marketing. In the maturity phase of the product life cycle, differentiated marketing becomes more feasible.
Homogeneity (homogeneity) of the market. If customers have the same taste, if they buy the same amount of a product, and if they respond similarly to marketing techniques, then undifferentiated marketing is appropriate.
Competitors' strategies. If competitors resort to market segmentation, undifferentiated marketing can be very dangerous. When, on the contrary, competitors use undifferentiated marketing, a firm can achieve an advantage over them by applying a strategy of differentiated or concentrated marketing.
1. Undifferentiated marketing.
Perhaps the company will decide to ignore differences in segments and appeal to the entire market at once with the same offer. In this case, she concentrates her efforts not on how the needs of clients differ from each other, but on what these needs have in common. She develops a product and marketing program that will seem attractive to the possible more buyers. It relies on mass distribution and mass advertising methods. It strives to give the product an image of superiority in people's minds.
Undifferentiated marketing is economical. The costs of producing a product, maintaining its inventory, and transporting it are low. Advertising costs for undifferentiated marketing are also kept low. The absence of the need to conduct marketing research of market segments and planning by these segments helps reduce the costs of marketing research and product production management.
A firm that uses undifferentiated marketing typically creates products that appeal to the largest segments of the market. When several firms engage in similar practices at the same time, intense competition arises in large segments and customers in smaller segments receive less satisfaction.
2. Differentiated marketing.
IN in this case The company decides to enter several market segments and develops a separate offer for each of them.
3. Concentrated marketing.
Many firms see a third marketing opportunity that is particularly attractive to organizations with limited resources. Instead of concentrating its efforts on a small share of a large market, the firm concentrates its efforts on a large share of one or more submarkets.
Concentrated marketing is associated with increased level risk. A selected market segment may not live up to expectations.
It may also happen that a competitor wants to penetrate into the selected market segment. Given these considerations, many firms choose to diversify their activities into several different market segments.
When choosing a market coverage strategy, you need to consider the following factors:
1. Company resources.
When resources are limited, the most rational strategy is concentrated marketing;
2. Degree of product homogeneity.
The undifferentiated marketing strategy is suitable for uniform products. For products that may differ in design, differentiated or concentrated marketing strategies are more suitable.
3. Stage of the product life cycle.
When a company enters the market with a new product, it is advisable to offer only one version of the new product. In this case, it is most reasonable to use undifferentiated or concentrated marketing strategies.
4. Degree of market homogeneity.
If customers have the same tastes, purchase the same quantities of a product at the same time periods, and respond in the same way to the same marketing stimuli, it is appropriate to use an undifferentiated marketing strategy.
5. Marketing strategies of competitors.
If competitors are engaged in market segmentation, an undifferentiated marketing strategy can be disastrous.
Conversely, if competitors use undifferentiated marketing, the firm may benefit from using differentiated or concentrated marketing strategies.
3.2 Procedure for market segmentation
Carrying out market segmentation is an activity based on market research and consisting of several successive stages. The sequence of stages does not depend on what specific method is used as the basis for segmentation (Fig. 3.2).
Rice. 3.2. Segmentation procedure
Let's take a closer look at each of the listed stages.
1. Qualitative market research.
Conducting marketing research is aimed at searching for consumer motivations, determining consumer attitudes towards a product and understanding consumer behavior.
Typical research methods used in this
stage are focus group interviews or consumer surveys.
At the same time, the researcher can identify consumers' point of view on competitors' products. It is quite easy for manufacturers of goods to detect the emergence of signs of competition when it comes to the production of similar goods, and finding out the opinions of consumers allows us to look at the problem of competition more broadly.
2. Quantitative market research.
As a result of the quantitative study, we determine
important quantitative relationships and values of parameters describing the market.
Data are collected either through mailed questionnaires or through personal interviews.
To carry out the analysis, a sufficient number of consumers must be examined. The sample size depends on the required level of accuracy and the choice statistical methods that are intended to be used, as well as what information for each segment will be regarded as necessary and sufficient.
Typically, the minimum sample size is 100 interviews per segment, so if there are three or four different samples, the number of questionnaires designed to ensure the completeness of the questions asked should be several hundred.
To conduct structured and comprehensive quantitative research, when designing questionnaires and conducting surveys, it is necessary to consider and try to identify the following: the most important points:
– a list of consumer characteristics and their ordering by importance;
– consumer awareness of existing brands and ratings of brands;
– typical patterns of product use;
– consumer attitude towards this product category;
– individual habits of consumers and their attitude towards the media.
The variables used to segment markets are given in Table. 3. It is clear that market segmentation can be carried out according to one, two, three or more parameters. One-dimensional segmentation. There can be any number of buyers in the market - from one to the size of the world's population. For simplicity, in Fig. 2 shows a market of six buyers. Since the needs and requirements of every buyer,...
For international markets or for countries with significant cultural differences in population. Variable values of national-cultural characteristics of market segmentation are reflected in table. 1.2. Table 1.2 Market segmentation by national and cultural characteristics Segmentation variables Socio-economic indicators 1. Nationality Belarusians, Russians, Ukrainians, Lithuanians, Poles, Jews and...
The product's place is found by comparison. There is also a known method for drawing up functional maps, based on the compilation of three types of maps: · Product positioning map · Map consumer preferences· Summary Map Positioning and segmentation are closely related concepts. The positive impulse of the company itself positions the product, that is, the buyer believes the brand...
Meets the needs of consumers and is assessed by comparing costs and profits received from the results of its activities, i.e. determined by the economic efficiency of market segmentation. 2 Analysis of segmentation of the perfumery products market in commercial activities Optima company 2.1 Analysis of the main economic indicators of activity trading enterprise Optima company...
Marketing segmentation reveals the possibilities of various market segments in which the seller will act. After this, the company needs to decide:
· how many segments should be covered;
· how to identify the most profitable segments.
There are three options for market coverage:
1) Undifferentiated marketing;
2) Differentiated marketing;
3) Concentrated marketing.
Undifferentiated Marketing- this is a situation when a company decides to ignore differences in segments and appeal to the entire market at once with the same offer. In this case, she concentrates her efforts not on how the needs of clients differ from each other, but on what these needs have in common. The company develops a product and marketing program that will be attractive to as many buyers as possible. The firm relies on mass distribution and mass advertising methods. She seeks to betray the image of superiority in people's minds. Moreover, undifferentiated marketing is economical. The costs of producing a product, maintaining its inventory, and transporting it are low. Advertising costs for undifferentiated marketing are also kept low. The absence of marketing research into market segments and planning broken down by these segments helps reduce the costs of marketing research and product production management.
Differentiated Marketing- In this case, the company decides to enter several market segments and creates a separate offer for each of them. The company expects that by strengthening its position in several market segments, it will be able to identify a company with a given product category in the consumer’s mind. Moreover, she expects an increase in repeat purchases, since it is the company's product that meets the desires of consumers, and not vice versa.
Concentrated Marketing- Many firms see a third marketing opportunity, especially attractive for organizations with limited resources. Instead of concentrating its efforts on a small share of a large market, the firm concentrates its efforts on a large share of one or more submarkets. Through concentrated marketing, the firm ensures a strong market position in the segments it serves because it knows the needs of those segments better than others and enjoys a certain reputation. Moreover, as a result of specialization in production, distribution and sales promotion, the firm achieves savings in many areas of its activities.
Concentrated marketing is associated with an increased level of risk. A selected market segment may not live up to expectations, for example, consumers may stop buying a product of the type offered. As a result, the company will suffer large losses.
Choosing a market coverage strategy. When choosing a market coverage strategy, you need to consider the following factors:
1) company resources. When resources are limited, the most rational strategy is concentrated marketing;
2) degree of product homogeneity. An undifferentiated marketing strategy is suitable for uniform products such as wheat or steel. For products that may differ in design, such as cameras and automobiles, differentiated or concentrated marketing strategies are more appropriate;
3) stage of the product life cycle. When a company enters the market with a new product, it is advisable to offer only one version of the new product. At the same time, undifferentiated or concentrated marketing strategies are most effective;
4) degree of market homogeneity. If buyers have the same tastes, purchase the same quantities of goods at the same times, and respond in the same way to the same marketing stimuli, it is appropriate to use an undifferentiated marketing strategy;
5) marketing strategies competitors. If competitors are engaged in market segmentation, an undifferentiated marketing strategy can be disastrous. If competitors use undifferentiated marketing, the firm may benefit from using concentrated or differentiated marketing.
22. Positioning of a product in the target market segment is:
a) identifying a “niche” in the target segment;
b) identifying product positions that are most attractive to members of the target segment;
c) identifying a place in the target segment for the company’s product that will allow it to be distinguished from competitors’ products and provide the company with a competitive advantage;
d) determination of positions occupied in the target segment by competitors' products.
Task
Option 30
Product positioning is the assessment (determining positions) of a product based on its main characteristics. By product positions, marketers mean the consumer’s assessment of the place and position that a given product occupies in relation to competing products.
When choosing target market segments, a company needs to decide which strategy will be optimal for its products.
Marketing offers the following three types of development: undifferentiated and concentrated.
Problem solving
Before using any one type of strategy, a company must solve the following problems before entering the market:
If it is assumed that the company's products will become attractive to the majority of consumers, then the optimal solution would be to use the undifferentiated marketing technique.
The company ignores the differences in segments and enters the entire market as a whole offering one product.
Therefore, both the product and marketing program should be of interest to most consumers. In the early stages of their existence, the strategy of undifferentiated marketing was used by such famous companies as Ford, British Airways and Coca-Cola.
Economic aspects
Choosing this type marketing, the company assumes that identical products will differ from its own products mainly in cost. Marketing will be aimed at ensuring that the product is fixed in people’s minds as the best in comparison with other types of products.
The company's strategy in this case will be aimed at reducing all possible costs: advertising, sales, production and service.
Due to the small range of goods produced, the cost of their production is significantly reduced. Also, inventory storage and transportation become relatively small. There is no need to research and analyze market segments separately, and costs for production management and marketing activities are also reduced.
Under such market conditions, it will be relatively easy to beat competitors with similar products.
Advantages and disadvantages
Undifferentiated marketing is chosen by a company that finds it difficult to identify the target segment of consumers in the market based on formal criteria, or the segments can transform over time. For example, in an area such as Fashion, preferences change extremely quickly, so the use of undifferentiated marketing is necessary.
Advantages of this type of marketing:
- low level of production costs due to mass production;
- practically unlimited boundaries of the potential market;
- marketing activities require minimal costs;
- easy entry to the market;
- When similar products appear, low costs at all stages of the business process create advantages over competitors.
Disadvantages of undifferentiated marketing:
- if a new product has flaws, its value can be significantly reduced;
- cost reduction methods can be copied by competitors;
- the company's attention is constantly focused on reducing costs, which often makes it difficult to respond in a timely manner to changes in market conditions;
- Unforeseen increases in costs, for example for electricity or raw materials, may lead to a decrease in competitive advantages goods at the cost level;
- developing new products that could presumably be in demand among consumers is difficult.
Examples
A textbook example is marketing activities of Coca-Cola. The company is present on the market as a single product in the expectation that among huge amount consumers, there are quite a lot of buyers who are ready to purchase their product without any effort on their part. Although during for long years sales of goods may vary appearance, aroma and other things.
Japanese magic chest fukubukoro is a sealed box containing a wide variety of products. Buyers purchase a chest based on the recommendations of sellers, since everything inside separately costs much more. Thus, people buy a box cheaply, but what is in it is unknown.
General Motors cars. The manufacturers of these cars claim that they produce equipment for any person, any wallet and any purpose. Indeed, the company counts on everything age categories, and this calculation is justified. In addition, the corporation places bets on repeat purchases of its cars, which is also justified in practice.
Hardware and software from IBM. The company's variety of products is aimed at a variety of market segments. IBM technologies are known all over the world and are widely in demand.
Farm Journal. Has a global audience, releasing 1134 various options their issues, which scrupulously take into account the needs of readers. Thus, magazines are published not only in a highly specialized manner (for cotton farmers, for pig farmers, for dairy cattle breeders, etc.), but all 26 regions of the United States are taken into account in the publication options.
Selecting a strategy type
When choosing a market strategy, an enterprise needs to consider the following factors:
- company resources;
- level of product variety;
- marketing strategies chosen by competitors.
If a company has limited resources and customers of this market have similar tastes and respond to stimuli in the same way, then it is more rational to choose a strategy of an undifferentiated type.
If products are differentiated in design, the market is clearly segmented, and competitors employ a differentiated or concentrated type of strategy, undifferentiated marketing can be disastrous for the enterprise.
Do not forget that the total strategy of undifferentiated marketing, that is, complete market coverage, is available exclusively to large companies.