The costs of Advertising a product or service is huge and thus organizations need to carefully craft an advertising strategy that will not only effectively market their product or service to the target consumers but will also be cost effective. It is at this stage, i.e. is drafting a cost-effective yet high ROI advertising campaign, that market coverage strategy comes into the picture.
What is Market coverage Strategy?
Market coverage is the assessment of the marketplace and subsequent determination of how much of the marketplace the business should cover with their advertisement for a particular product or service. By taking into account factors like the culture and buyer behaviour, economy and other factors, businesses assess the marketplace and understand their product’s relationship to each market. This understanding helps them formulate an effective market coverage strategy.
Market coverage strategy is the beginning of a marketing plan and precedes everything else. It depends on both internal and external factors and it is the business’s prerogative to determine whether it wants to spread throughout the market or focus on specific markets.
A small firm; with limited resources, for example, might decide to concentrate its marketing efforts only to a few marketplaces. On the other hand, a large firm, with adequate marketing muscle power and resources, might decide to go all out and expand its marketing efforts to all available market segments.
How to improve market coverage for a firm?
Now that we understand what a market coverage strategy is, let us discuss the different type of market coverage strategy that can help businesses reap the maximum dividends from their investments on advertising their products or services. Listed below are the different kinds of market coverage strategy:
1. Undifferentiated marketing strategy
Also called Mass marketing, in undifferentiated marketing strategy, the entire market (whose traits are alike) is considered as a single unit. This kind of market is characterized by market aggregation and a single marketing mix strategy is thought to be effective for the entire market. The strategy here assesses the common consumer needs in the marketplace and then offers one product or service for all the markets or multiple products and services for all markets.
This kind of marketing strategy became prominent when factories started manufacturing large quantities of undifferentiated products that met the needs of all consumers. A very famous quote that explains undifferentiated marketing extremely well was by Henry Ford who had famously said to his customers “You could your Model T painted any colour, as long as it was black”!
With lesser work hours, minimum marketing research data, and no variation of content (like in other kinds of advertising), undifferentiated marketing has far less operating cost and this is one of the cheapest forms of marketing strategy. The basis for this kind of market coverage is the quantity and not quality and thus it has a wider reach than other kinds of coverage strategy.
The wider reach helps businesses get better brand recognition. However, not all is hunky dory with undifferentiated market coverage. Since businesses proverbially put all their eggs in one basket; they are more susceptible to market changes. Businesses adopting this coverage strategy might also face the possibility of upsetting consumers who might prefer customized products over undifferentiated products.
You can read more about Mass Marketing here.
2. Differentiated marketing strategy
This kind of market coverage strategy takes into account the heterogeneous nature of the market. A mass marketing approach is done away with and businesses customize their marketing strategy for individual target markets. The business might decide to target several market segments or focus on a selected few segments.
The concept of market segmentation (dividing the market into segments that have similar consumer demographics, come under the same geographic area, have similar psychographs and nature of consumers) comes into play in this kind of marketing. Businesses have the option of differentiating their marketing strategy in three ways:
- by modifying the product
- by offering different levels of service
- by offering products through different channels
The advantage of this kind of market coverage strategy is that it helps businesses meet the exact need of their target consumers, thus increasing the possibility of overall sales. An apt example here would be organizations selling detergents.
Though detergent is a common need of for all segments, some prefer the detergent to have more cleaning power while others prefer that the detergents have fabric care properties while some others prefer that their detergents are environment-friendly. Detergent manufacturers implement differentiated market coverage strategy and thus segment the detergent market based on these varied needs of the end consumer.
The negative side of differentiated market coverage strategy is the high cost related to Designing customized product offerings and then having a customized marketing effort to each customer group. Some other disadvantages include cannibalizing their own products and inconsistent message through different marketing campaigns.
You can read more about Differentiated marketing strategy here.
3. Concentrated marketing strategy
In this kind of market, the strategy focuses on a particulars section of the market. Businesses first identify the targeted market and then concentrate their marketing efforts on this segment. This kind of approach employs concentrated marketing efforts to gain a large share of the small market segment. Concentrated marketing coverage strategy is particularly useful for smaller businesses with limited resources or businesses that want to cater only to a specific set of population.
Examples of concentrated marketing strategy can be found in companies like Rolls Royce, Forest Essentials, Rolex and others. These firms aim to become specialist in their chosen market segment and thus not only have the maximum ROI on their advertising strategy but also are able to have a positive impact on marketing and distribution while simultaneously saving costs through the large-scale production of limited products.
One of the biggest benefits of this kind of coverage strategy is that the target consumers of this segment become loyal customers and continue to favour even newer products by the same firm.
You can read more about concentrated marketing here.
Like the other two kinds of market coverage strategy, concentrated marketing strategy too has its own disadvantages such as slackening demands having an adverse effect or ignoring other profitable segments.