For the last 10 years, everyone has started to focus on innovation: innovation of ideas, innovation of services, innovation of products, innovation to reduce prices and what not. All of these steps have been taken to create differentiation. A differentiation strategy helps incorporate features in the products which helps to differentiate the product from the competition. There are many tactics for differentiation including use of the complete marketing mix, the STP and others.
Most of the big companies in the world such as Mcdonalds, KFC, Starbucks, Comcast, Arla Foods, LEGO, are doing their best to come up with different customized marketing strategies in order to be able to accomplish the needs of completely different segments of customers, from every continent. However, the opposite of creating differentiation is undifferentiated marketing and here we are presenting the undifferentiated marketing concept. As it sounds, it might be considered that we are taking some steps back in the past, when there was only one marketing strategy for all products and services, no matter the culture, demographics, social factors, etc. But is it like this? Or are we just being confused by the name?
Undifferentiated marketing is also known as mass marketing, which consists of ignoring any of the market segments and presenting the same product / service to the entire market that you are targeting. There are very few brands in the market which are using undifferentiated marketing. This is because there is so much competition nowadays, that you have to target each market specifically. You cannot let your prospective customers shift to another brand. Thus, companies build larger product portfolios, and then design marketing communications so that each of the product / SBU has its own strategy to succeed. Why undifferentiated marketing cannot be used for a multi product or a deep portfolio company is explained below with the example of Arla foods.
Example of Undifferentiated marketing or Mass marketing (And how it is difficult to sustain this strategy in current market scenario)
Lets take an example of Arla Foods, the biggest Scandinavian dairy companies. Arla foods tried to introduce milk powder into the East African market. So, lets assume that the East African community was their target market. This East african community consists of many countries like Uganda, Kenya, Tanzania and others. So by using undifferentiated marketing, we are coming to the conclusion that Arla foods will have the same marketing strategy for all its dairy products. However, it is not so. This is because there are huge differences between the countries in terms of the dairy industry and milk drinking culture. Bringing the same product in all the countries with the same type of marketing will end in complete failure. Tanzania for example is considered to be a perfect market for milk powder, as the main imports in the dairy industry are the milk powders. However, Kenya has an increased number of cattle, with more milk production facilities compared to Tanzania. Thus, Kenya does not need Milk powder, but might need more ice cream. Therefore, the marketing strategy applied in Tanzania will not prove to be sustainable and profitable for Kenya. This is a small example of how undifferentiated marketing or mass marketing works.
Some of the main benefits of the undifferentiated marketing strategy is that it is less based on a research intensive approach and it allows a wider reach of a bigger audience. With low production costs, less risk involved, low marketing research and advertising cost as well as higher potentials of sales volumes and efficiency of scale in a much larger market, the mass marketing strategy is assuming a high degree of similarity conducting to overgeneralization in a society where people are fighting every day to be more and more unique.
A decision regarding the most effective way to segment the market highly depends on the product and the industry in which the product is being produced. Undifferentiated marketing strategy is cheaper than the other marketing strategies such as differentiated marketing as well as concentrated marketing. However, this does not mean that it is going to be more profitable. It is quite hard, generally speaking, quite impossible to get a product and marketing communications to be constant and universally appealing. On top of it, making it profitable is more difficult.
Thus you will find that undifferentiated marketing or mass marketing is an an idea for small companies coming to the market with only one product or service thereby using mass marketing. Consider this scenario. A new company has started which is into shoe manufacturing. As on date, it manufactures all types of shoes, with variants in design and pricing. However, the brand equity of the company is very low and hardly anyone knows this company. Thus, at this time the company will not focus on differentiation. Rather they will want to create awareness. Thus, they will use mass marketing. Following that, once they develop their portfolio and get enough brand equity, they move to the differentiated marketing strategies.