Service Market Segmentation Strategy

Three strategic options are open to marketers indeed organizations, in choosing markets and products to use in serving the markets. These are mass marketing/undifferentiated marketing, product variety/product differentiation marketing, and target marketing.

Mass Marketing/ Undifferentiated Marketing

Here the marketer is either ignorant of differences among the population of buyers or is aware of the differences but prefers to presume that the population of buyers can be served with one product. In mass marketing, or what is alternatively called undifferentiated marketing, the marketer offers one product or uses one blend of the marketing mix to serve the whole market.

This marketing operation is characterized by mass production, mass distribution, and mass promotion of one product, obviously at a low price on account of economies of scale.

This marketing strategy was attractive and perhaps still is commendable in shortage and scarce economies where the emphasis may rightly be on increasing the production of products and making them affordable.

In competitive markets, however, its ability to sustain profitable operations for organizations is, to say the least, doubtful.

Over time buyers have developed sharply different tastes, are more informed, critical, and discriminatory, and· will not settle for just any product simply because it is cheap.

Consumers now want their requirements and specifications roundly met in product offerings before they buy.

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Undifferentiated marketing, it seems to us, has ceased to be a potent strategy in modem marketing and markets are increasingly being flooded with a deep assortment of product brands.

Organizations are daily challenged these days to justify their continued existence and their positions are equally threatened by innovative and aggressively combative competitors and even upstarts striving to carve out niches for themselves.

Product Variation/Product Differentiation Marketing

Perhaps in recognition of the inadequacy of undifferentiated marketing to serve organizations in attracting and maintaining sufficient customer patronage in developed and developing marketing systems, marketers in the recent past are increasingly turning to product differentiation marketing.

Simply put, this strategy suggests that differences in the taste and buying nee,d,s and behavior of consumers can be addressed if varieties of a product are pushed into the market.

The assumption is that each brand will appeal to a group of buyers in the consuming population, and ultimately the different brands put together will meet the different wants of buyers.

In this strategy, each company offers different product offerings or marketing mixes to expectedly serve various market segments. Product differentiation can be achieved by varying the features, styles, qualities, packages, sizes, and colors of products.

The attempt at product differentiation is usually supported by advertising. Advertising will emphasize the features which differentiate or distinguish one product from others in the same category.

This strategy is often adopted when a company is faced with competition. So product differentiation marketing is merely a company’s answer to competition and not a deliberate effort by the company to identify customer needs/wants and satisfy them.

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However, this attempt to meet competition by product differentiation has contributed greatly to progress in product development. It has led to actual product improvement.

Target Marketing

In this strategy, marketers are aware that a given customer population comprises heterogeneous units that can be grouped into somewhat homogenous groups or segments, each segment expected to respond in the same way to given marketing stimuli (ie. blend of the marketing mix).

The acceptance of the heterogeneity of the general market or mass market supports the proposition that different blends of marketing mixes be developed for the different segments of the market.

Target or differentiated marmarkeingherefore aims at dividing a large heterogeneous market into homogenous groups or segments and developing a marketing mix that will appeal directly and efficiently to buyers in each.

Alternatively, a market can select two or more market segments and develop a distinct marketing mix for each. Another option will be to develop as many market mixes as there are market segments in each market you will notice that in target marketing, marketing planning starts with the effort to know who the customers are, what their needs/wants are, and how best they can be satisfied.

Target marketing according to Adirika (1993) requires four major steps – market segmentation, market targeting, market penetration, and product positioning.

Read Also: The Various Types of Markets and Core Functions of Marketing

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