Assignment and Presentation on

Market Strategies for Business Segmentation

Course name- Business Marketing

Course number- MKT-514
Submitted to:
Dr. Serajul Hoque
Professor
Department of Marketing,
Faculty of Business Studies,
University of Dhaka

Submitted by:
Name: A. Mubdiul Alam (Hriday) Name: Mohibur Rahman
Roll- 63 Roll- 215
Batch- 21ST Batch- 21st
Section- A Section-A
Department of Marketing, Department of Marketing,
Faculty of Business Studies, Faculty of Business Studies,
University of Dhaka University of Dhaka

Date of submission – 01 August, 2019

 Market Strategies for Business Segmentation

1. Introduction
Segmentation refers to the process of dividing the market of consumers into groups based on one
or more shared internal or external characteristics. After the segmentation process is complete,
the next step is targeting, which involves the marketer's choosing a segment or segments in
which to communicate the promotional message. There are three different targeting strategies
that a marketer can implement. The marketer must make the important decision as to whether he
or she wishes to use an undifferentiated, concentrated, or differentiated targeting strategy.

2. Discussion

2.1 Undifferentiated Marketing Strategy:

An undifferentiated marketing strategy uses the concept of “market aggregation,” wherein the
total market is treated as if it were one homogeneous market segment. Marketing management
creates a single marketing mix to serve potential customers within this market. This approach
focuses on common needs of buyers, rather than how buyers’ needs differ. For certain types of
widely consumed items (e.g., gasoline, soft drinks, white bread), the undifferentiated marketing
approach makes the most sense. For example, toothpaste (such as the brand Crest) isn’t made
specially for one consumer segment, and it is sold in huge quantities. The manufacturer’s goal is
to get more people to select and buy their particular brand over another when they come to
the point of purchase. Walk through any supermarket, and he/she will observe hundreds of
grocery products, especially generic items, that are perceived as nearly identical by the consumer
and are treated as such by the producer. Many mass-marketed items are considered staple or
“commodity” items. People buy new ones when the old ones wear out or are used up, and mass-
marketed brand loyalty might be the primary driver when they decide which replacement product
to purchase.
2.2 Differentiated Marketing Strategy:
A differentiated marketing strategy attempts to distinguish a product from competitive product
offered to the same aggregate market. An example of a firm using a differentiated marketing
strategy is Samsung, which offers various types of mobile phones to different segments in the
mobile market. By differentiating its product or product line, the firm identifies several potential
target markets. When it is successful, differentiated marketing can create a very strong,
entrenched market presence that is difficult for competitors to displace because of consumers’
strong affinity for products and offers that meet the unique needs of their segment. A
differentiated strategy can be a smart approach for new companies that enter a market and lure
customers away from established players to capture share in a large overall market. Often,
established companies become vulnerable to new competitors because they do not give sufficient
attention to the perfect marketing mix for any given market segment.

Although usually it can be shown that total sales may be increased with the marketing of a more
diversified product line, such activity does increase the cost of doing business. The following
cost are likely to be higher when a firm elects to pursue a differentiated marketing strategy:

2.2.1 Product modification cost: Modifying a product or product line to serve different
segment requirements usually involves additional research and development, engineering and
special tooling cost.

2.2.2 Production costs: For each product, the longer the production setup time and the smaller
the sales volume, the more expensive it becomes.

2.2.3 Administrative costs: The firm must develop several marketing plans for different
segments, usually necessitating additional effort in marketing research, forecasting, sales
analysis, promotion planning and channel management strategy.

2.2.4 Inventory costs: Managing inventory is more costly generally than managing an inventory
of only one product.

2.2.5 Promotion costs: in trying to reach different market segments with variations of
promotional mix, each segment may require separate creative advertising planning, sales strategy
and so forth.
2.2.3 Concentrated Marketing Strategy:
It is also known as Focus marketing. It involves finding a niche market of consumers that has not
been captured yet and developing goods and services for that market to a large segment of
consumers by offering a product/service that the competition does not. The firm goes after a
large share of one or few sub markets thereby enjoying economies of scale as well as high
market penetration and high market share.

Concentrated marketing is, however, not without risk. A particular market segment’s demand
can turn downward or a competitor may decide to enter the same segment. The defense industry
offers a good example of this situation. The Electric Boat division of General dynamics builds
submarines in Connecticut and Rhode Island for one customer, the U.S Navy. As defense
spending is being curtailed in this area, thousands of the firm’s employees are feeling the effect.
Also, the addition of the Newport News, Virginia, facility as a competitor has increased the
competition. Risks such as these lead some business-to-business firms to operate in more than
one segment

Figure: Application areas of three alternative market segmentation strategies

 3. Significance
Three alternative market segmentation strategies are very significant to a firm’s business success.
By using these three alternative market segmentation strategies, marketers can fulfill the
customers’ needs properly.

3.1 Undifferentiated Marketing Strategy:

 Economies of scale can be gained.
 Reduces the production, transportation and inventory cost.
 Lowest advertisement and marketing cost.
 Leads to cost leadership

3.2 Differentiated Marketing Strategy:

 We can increase total sales volume.
 Minimizes severe threat of price competition
 Creates brand loyalty among customers.
 We can achieve market share through perceives quality.

3.3 Concentrated Marketing Strategy:

 Strong market position can be gained.
 Opportunities can be exploited through specialization in production, distribution and
promotional functions.
 Competitive advantage can be made.
 Customers’ satisfaction can easily be gained.
 4. Conclusion
With any of the strategies described above, the marketing team must come together to develop a
marketing mix tailored to the needs of each segment being targeted. Each strategy has its own
characteristics. So, marketers need to identify in which segment they are going to operate their
business. Otherwise the whole marketing plan will go in vain.