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AD 2.2
An example of an institutional ad.
organization has certain strengths and weaknesses, which target group within the market
should I select? The process is depicted in Figure 2.1
For a particular product, marketing organizations might follow an undifferentiated,
segmentation, or combination approach toward a market. These concepts are explained in
the following sections.
The Undifferentiated Market (Market Aggregation)
The undifferentiated approach occurs when the marketer ignores the apparent differences
that exist within the market and uses a marketing strategy that is intended to appeal to as
APPROACHING THE MARKET
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Undifferentiated
ITarget market(s)
Actions
Access market
Select a
Segmented
ITarget market(s)
Actions
needs and company
strategic
capabilities to meet
approach to
needs profitably.
the market.
Combination
ITarget market(s)
Actions
FIGURE 2.1
Approach es to the market
many people as possible. In essence, the market is viewed as a homogeneous aggregate.
Admittedly, this assump tion is risky, and there is always the chance that it will appeal to
no one, or that the amount of waste in resources will be greater than the total gain in sales.
For certain types of widely consumed items (e.g., gasoline, soft drinks, white bread),
the undifferentiated market appro ach makes the most sense. One example was the campaign
in which Dr. Pepper employed a catchy general-appeal SlOgan, "Be A PEPPER!", that really said nothing specific about the product, yet spoke to a wide range of consumers. Often, this
type of general appeal is supported by positive, emotional settings, and a great many rein-
forcers at the point-of-purchase. Walk through any supermarket and you will observe hun-
dreds of food products that are perceived as nearly identical by the consumer and are treated
as such by the producer-especially knock-off or generic items.
Identifying products that have a universal appeal is only one of many criteria to be
met if an undifferentiated approach is to work. The number of consumers exhibiting a need
for the identified product must be large enough to generate satisfactory profits. A product
such as milk would probably have universal appeal and a large market; something like a
set of dentures might not. However, adeqJate market size is not an absolute amount and
must be evaluated for each produ ct.
Two other considerations are important: the per unit profit margin and the amount of
competition. Bread has a very low profit margin and many competitors, thus requiring a
very large customer base. A product such as men's jockey shorts delivers a high profit but
has few competitors.
Success with an undifferentiated market approach is also contingent on the abilities
of the marketer to correctly identify potential customers and design an effective and com-
petitive strategy. Since the values, attitudes, and behaviors of people are constantly chang-
ing, it is crucial to monitor these changes . Introduce numerous cultural differences, and an
extremely complex situation emerges. There is also the possibility that an appeal that is
pleasing to a great diversity of people may not then be strong or clear enough to be truly
effective with any of these people.
Finally, the competitive situation might also promote an undifferentiated strategy. All
would agree that Campbell's dominates the canned soup industry, and that there is little
reason for them to engage in much differentiation. Clearly, for companies that have a very
large share of the market undifferentiated IT'arket coverage makes sense. For a company
with small market share, it might be disastrous.3
Product Differentiation
Most undifferentiated markets contain a high level of competition. How does a company
compete when all the product offerings are basically the same and many companies are
in fierce competition? The answer is to engage in a strategy referred to as product differ-
entiation. It is an attempt to tangibly or intangibly distinguish a product from that of all
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