The marketing and advertising cost of your product/service is usually very high. Therefore, businesses and companies need to carefully plan their advertisement strategy. It should be able to serve two purposes, first, it should be cost-effective, and second, it should market the right message to the target customers.
In other words, we plan a strategy that would increase the ROI (return on investment) with the lowest possible cost. It brings up the concept of market coverage. Today, we’ll market coverage, its pros, and cons, different factors, and we’ll explain it with example.
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What is Market Coverage?
Market coverage strategy is the process of examining the marketplace and finding out how much of the total market your advertising campaign should cover for a specific product/service. While assessing the marketplace, businesses and companies also keep in mind the economic factors like the buying power of customers and cultural trends.
Most importantly, they also check the relationship of their product with the marketplace. The purpose of the assessment is to place an effective and efficient market coverage strategy.
Market coverage provides the basis to formulate the market strategy and plan and build everything on it. Now it’s up to the business or company whether it wants to cover and spread its operation all over the market, or it just wants to focus on the specific market area.
For instance, a small business with limited resources may focus its marketing and advertisement campaign on a certain area of the marketplace. On the other hand, a big business with a plethora of resources at its disposal has the option to expand its focus on different segments of the marketplace.
Following are the 3 different market coverage strategies, advantages, disadvantages, Examples, factors when choosing these strategies
The undifferentiated marketing strategy also goes by the name of mass-marketing, where you consider the whole market as a single unit. Here you focus on the common needs of all the customers and avoiding differentiation. That’s why you choose one type of marketing mix strategy and apply it to the whole market. It means that you offer one type of product/service to the whole market.
Pros and Cons of Undifferentiated Marketing
- The production, distribution, inventory, and transportation cost is usually down in undifferentiated marketing strategy due to the economies of scale.
- The advertising and marketing cost is also lower because businesses do not focus on niche marketing.
- There’s no marketing research expense because the businesses don’t spend their resources conducting the planning and marketing research.
- When businesses offer one type of product/service to the whole market and avoid the different needs of different groups. It results in the form of customer dissatisfaction.
Examples of Undifferentiated Marketing
Some companies followed the undifferentiated marketing strategy and added unique color, design, taste, size, warranty, and other features in their product/service and offered it to the whole market. They’re as follows;
Toothpaste manufacturing companies are very good examples of undifferentiating marketing strategy. They all offer toothpaste more or less the same thing. There are very few companies that offer toothpaste specifically for children and patients.
Rice, wheat, salt, and bottled waters are also some of the main products that their producers follow the undifferentiated marketing strategy.
The competition level is higher in the undifferentiated marketing strategy, when more businesses jump in, it reduces the profitability of the company.
Differentiated marketing strategy is when businesses and companies focus on a different segment of the market, and they provide different offers to each segment. Here you customize different marketing strategies to target a different segment of the market. The target market may comprise several segments, but you may focus only on the few segments according to your plan.
Differentiated marketing strategy follows the market segmentation strategy. You divide the whole market based on the demographic, psychographic, geographic, and many other levels. Now, businesses and companies have the option to follow three differentiated marketing strategies.
- They can offer products by using different channels.
- They can choose to modify and update the product.
- They can also provide different types of services.
Pros and Cons of Differentiated Marketing
- It helps businesses and companies to focus on the needs and wishes of customers which ultimately increase the overall sale.
- When you identify the needs of customers and offer the product/service whatever they want, it makes the customer loyal to your brand.
- When the sale increases, it has a positive impact on the profitability of the company.
- When you design customized products for a different segment of the market, the production and manufacturing cost increases.
- The marketing campaigns and researches don’t give you exact and precise answers.
- The differentiated marketing strategy also means that the company has to launch different marketing and advertisement campaigns for each segment.
Examples of Differentiated Marketing
E-commerce platforms like Amazon and Alibaba provide free home delivery service, and competitors can’t afford to offer it.
Cellular network and data providing companies promote different types of mobile data packages for different types of customers. Only some of them would offer 4G or 5G mobile data internet service in a certain area.
Some hotels and restaurants provide different types of offers. Like a special package for students and families and the service of meat platter.
The focus of the concentrated marketing strategy is to focus only on a certain section of the market. Businesses and companies first try to identify their target market, and then they launch their marketing efforts on the identified section. The purpose of a concentrated marketing strategy is to capture a major portion of the market share of the small market section. A concentrated marketing strategy is very beneficial for small businesses with limited capital and resources.
Pros and Cons of Concentrated Marketing
- It helps companies and businesses to become aware of the customers’ needs and can a special place in the market.
- They can reduce their cost through economies of scale by specializing in various operations of productions, distribution, and transportation.
- It can also provide a high ROI (rate of investment).
- The concentrated marketing strategy can cause problems when a strong competitor enters the market and capture all the profit.
- It’s a very risky strategy. If the identified market section turns out well, the company would earn a lot of profit. If the section doesn’t work well, the brand would lose everything.
- Wine coolers, California cooler launched a new product wine cooler by targeting only one section. It became so successful that many competitors jumped into the market. The original brand has no other choice but to sell out.
Examples of Concentrated Marketing
IT and tech training centers offer only the service of teaching the computer student by targeting tech professionals and IT students.
Tailor, milkmen, and vegetable sellers follow the concentrated marketing strategy.
Startup e-commerce companies apply the concentrated marketing strategy on social media by targeting only one section.
Mechanical keyboards are the need for coders, programmers, and enthusiast gamers, and they’re willing to pay a high price for it.
Factors to Consider when Choosing Market Coverage Strategy
Here are some of the following factors that you should consider while choosing the marketing coverage strategy for your business.
If you have a limitation of resources and capital, then you should choose a concentrated marketing strategy. You should also consider the product variability option.
If the product is uniform like sugar, petrol, gas, and diesel, and customers have a similar taste and purchase size, then your undifferentiated marketing strategy would be suitable.
If there are variety of designs in the product category like clothes and furniture, then you should consider the differentiated marketing strategy.