After thoroughly evaluating the different segments, the company can follow one of three strategies: market aggregation, single-segment concentration, or multiple segments targeting.
Aggregation treats the entire market as one, minimizing costs and often coupled with product differentiation. Single-segment focuses on one market, providing strong presence but with higher risks. Multiple-segments targeting caters to diverse groups to increase sales volume, useful in seasonal demand variations, though costlier in production and marketing.
AGGREGATION STRATEGY
The market-aggregation strategy is also known as a mass-market or an undifferentiated market strategy. Here, a seller treats its total market as a single segment. This strategy is not very common. However, it is usually selected after a firm has examined a market for segments and came to the conclusion that the majority of customers in the total market are likely to respond in a very similar fashion to one marketing mix.
In this case, the company develops a single product for this mass audience; develops one pricing structure and one distribution system for its product; and uses a single promotional programme aimed at the entire market. This strategy is appropriate for firms that are marketing an undifferentiated, staple product such as salt or sugar.
One important advantage of a market aggregation strategy is found in its cost minimization. For instance, it enables a company to produce, distribute, and promote its products very efficiently.
Very often, the market aggregation strategy is typical y accompanied by the strategy of product differentiation in a company’s marketing programme. Product differentiation occurs when in the eyes of customers, one firm distinguishes its product from competitive brands offered to the same aggregate market. With appropriate distinguishing strategies, a company can create the perception that its product is better than the competitor’s brands.
SINGLE-SEGMENT STRATEGY
A single-segment (or concentration) strategy involves selecting one segment from within the total market as the target market. Through concentrated marketing, the firm gains a strong knowledge of the segment’s needs and achieves a strong market presence. Furthermore, the firm enjoys operating economies through specializing its production, distribution, and promotion. If it captures segment leadership, the firm can earn a high return on its investments.
However, this strategy involves high than normal risks. For instance, if the market potential in that single segment declines, the seller can suffer considerably. In addition, a seller with a strong name and reputation in one segment may find it difficult to expand into another segment.
MULTIPLE-SEGMENT STRATEGY
This strategy involves the identification of two or more different groups of potential customers as target markets. A separate marketing mix is then developed for each segment.
Usual y, an organization adopting a multiple segment strategy develops a different version of the basic product for each segment. At times, market segmentation can also be accomplished with no change in the product, but rather with separate distribution channels or promotional appeals, each tailored to a given market segment.
This strategy normally results in a greater sales volume than a single-segment strategy. In addition, it is useful for an organization facing seasonal demand. For instance, due to lower summer enrolments, many universities in the United States market their empty dormitory space to tourists (i.e another market segment). Furthermore, a firm with excess production capacity may well seek additional market segments to absorb the excess.
In spite of the benefits that multiple-segments strategy possesses, it has some limitations with respect to costs and market coverage. For instance, marketing to multiple segments can be expensive in both for the production and marketing of products.
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