Question

Why does an unddifferentiated targeting strategy make sense when a company introduces a new product but not when competitors enter the field? Under what conditions would a multisegment strrategy make better sense?

Answer 1

When a company introduces a new product and there are no competitors it can go and make the product appeal to a large number of consumers. It can follow a single pricing policy for all the regions of the market and can follow a single advertisement strategy and try to penetrate the market segments without any difference in pricing, policies and marketing strategy since there are no competitors. The company will be in the penetration stage with its new product which nobody else has to offer.

Undifferentiated Targeting strategy does not make sense when competitors enter the field because:

1. The company has to keep a track of its competitors policies and pricing strategies and maket product accordingly to compete with its competitors. In such a scenario the marketing strategy ahs to be differentiated based on competitors.

2. The company has to check in for competitors existence in different markets, It is possible that competitors are existent in limited markets and hence the company will be pricing and formulating offers as per the competitors in those markets while it will formulate a different strategy where the competotirs are absent. Hence a differentiated targeting strategy will be followed.

3. When competitors have entered the field, it is obvious that it will capture atleast some share of the market. Now it is possible that in various market segments the competitors have capture major or vast matket, then the company has to formulate its strategy accordingly to win back or to capture a part of competitors market share.

4. Also when competitors are trying to enter the market, the company can provide additional offers and price discounts to prevent competitors entering the market.

Hence undifferentiated targeting strategy does not fit when competitors enter the market.

A mutlisegment strategy makes better sense in the following conditions:-

1. There are multiple market segements for a product and each market segment have a different expectation from the product. Hence the targeting strategy for each of this market segment has to be different from one another.

2. There has to be huge market in terms of volume since this type of strategy can be very expesive and there has to be a huge market to afford this kind of targeting strategy. Hence the business house itself has to be big opting for this type of marketing strategy, since small businesses cant afford this kind of marketing/targeting strategy.

3. This type of strategy can be adopted to a growing market which has a huge potential to grow and targeting strategy can be framed based on the need and expectation of each market segment, so that the market can be captured faster. The required condition therefore is the potential return has to be huge to offset the advertisement costs incurred now.

4. The consumers in the each market segment should have the same need, so that the strategy opted for that particular segment works for all the consumers in that segment. However the needs of the people in a different market segment should be different from the need of the people in a different segment, which resulted in the need of the multisegment strategy in the first place.

5. The multisegment strategy may target across various demographics in different market segment. The product itself should be affordable and accessible to each market segment to make this strategy a viable option.