In order for a business to be profitable, it is necessary to choose the right market or its segments. Enterprises that are engaged in production are required to analyze the environment and determine which audience the sale of goods will be aimed at. After that, an important step is the choice of a sales coverage strategy, on which the level of company income directly depends.
Marketing Analysis
In order to determine the most promising areas of the territory where products will be sold, the company's managers conduct market segmentation, i.e. break potential customers into groups with similar interests (segments) and then study their requests in detail. This process allows you to find the necessary target audience. This is followed by the choice of a market coverage strategy, which indicates how many groups will be covered by sales: one, several, or all buyers will be considered as a total mass of consumers. In order to determine the direction of the company's activitiescorrectly, it is necessary to study the environment in which the offer will operate, the characteristics of the product, and analyze the level of costs for manufacturing products. Only after that a decision is made, a marketing plan is developed, production and marketing of products are established.
Marketers divide the market into segments based on a number of criteria:
- demographic situation (consumer age, gender, family composition, nationality, etc.; this indicator is the most common and accessible when choosing a market coverage strategy, because the necessary data is quite easy to obtain, and potential customers themselves consider similar questions as standard);
- socio-economic features (reflect the status of buyers, their income level, ownership, etc.);
- behavioral models in relation to products (you can get these parameters by conducting marketing research, studying the data of customer services, websites; these resources include information about how often and what product customers buy, how much money they spend him, etc.).
With information about these factors, it is possible to conditionally identify groups among all consumers for whom the company's offer will be interesting, and the advertising campaign carried out will be quite effective.
Types of priority areas
When the sales area sections are defined, an action plan is selected. There are the following market coverage strategies in marketing:
- Massive (undifferentiated): givenorganization of production and marketing of products, the market is not divided into segments, customers are offered one type of product, a single management system is used (only the geographical features of the territory are taken into account). In these circumstances, the company sells products in all possible places. Her task is to sell as much wholesale as possible. Thus, the company earns a positive image for itself. Here, the benefit is achieved by minimizing the cost of manufacturing the product, so the offer of competitors has a higher cost. This method was first used by Henry Ford, the creator of the Model T car. This version of the vehicle from the manufacturer was at one time the only one. Anyone could buy such a car at an affordable price. Over time, this type of activity has become the main strategy for market coverage, because. Previously, mass production was launched at manufacturers. Today, the number of enterprises choosing this method of influencing the target audience has significantly decreased due to great competition, improved methods of promoting and selling goods, differentiation of consumer interests and the possibility of reducing costs through market segmentation.
- Differentiated marketing. This version of the market coverage strategy lies in the fact that several areas of the sales sphere (segments) are selected for influence, for each of them its own product line and appropriate methods for their promotion and implementation are developed. The company's work is aimed at attracting buyers of certain niches at controlled costs. Thisthe method is, in fact, a personalized approach to the consumer. It allows you to meet the needs of different groups of the population and make a profit by making different offers. This approach allows you to strengthen your position in the market compared to competitors, gain a good reputation, significantly increase product prices, which makes it possible to cover costs and profit from sales.
- Concentrated. Targets 1 segment, offers a unique product, promotes a brand and/or personal service.
These directions contribute to the definition of "your client" and largely determine the success of the company.
Choosing direction in business
In order for the production process to bring income to the company, at the initial stage it is necessary to determine the final goal and choose the direction of activity in which the plan will be implemented. In this case, you need to take into account all the advantages and disadvantages of the main market coverage strategies, because unforeseen shortcomings can significantly affect the outcome of the enterprise. Consider the features of the above ways of working in more detail.
Pros and cons of overall scope coverage
With a mass strategy, the market is not differentiated into separate segments, but acts as a single environment for the sale of goods. In such circumstances, products are oriented to a wide range of consumers. As a rule, it has similar features in the requests of buyers. Competitiveness in this case is achieved by improving the production process, whichreduces the cost of manufacturing a product, advertising campaign, service, etc. This is achieved by standardizing the products and the process of wholesale production, which leads to a decrease in the price.
This market coverage strategy has its advantages: reduced production costs due to the mass production of goods, savings in marketing costs, a sufficiently large market scale, optimal requirements for mastering the scope of sales due to low prices and large opportunities for comparison with competitors. But there are also disadvantages: for example, the introduction of technological innovations can increase cash costs, which means that the ratio between the costs of manufacturing products and the final price will not be optimal enough. Also, competitors can learn and copy ways to minimize funds, then all changes will not be justified at all. And by focusing on the possible simplification of the stages of product creation, you can be distracted and not notice important changes in the market that affect the business in time. It can also be quite difficult to develop a product that will be of interest to consumers.
Pros and cons of selectivity
Differentiated market coverage strategy involves working with several market segments. Certain types of goods are developed for them (raw materials, characteristics, original packaging, advertising are selected), the necessary marketing is planned and carried out.
In this situation, the company takes a strong position thanks to the original offer to consumers ineach segment. An individual approach to selected niches ensures an increase in sales. In this case, manufacturers set higher prices.
This strategy has a number of positive aspects, including comparative simplicity when entering the market, a more stable position when substitute products appear, the ability to confidently implement a strategic plan, experiment. Here, consumers are already guided by the brand and product quality, so they do not particularly react to price changes. And the originality of the offer makes it difficult for competitors to enter the market.
The disadvantages include: a large waste of time and resources for the manufacture of goods, careful and serious marketing, the fight against competitors that exist in each segment, the possibility of reducing the importance of differentiated features of the goods in the eyes of consumers, and in the case of borrowing production techniques from competitors - loss of product originality. But despite this, this approach provides deep penetration into each niche and a stable position of the manufacturer.
Features of sales in one area
Concentrated marketing strategy is the production of products for a specific category of customers in one market segment. It is mainly used by organizations with limited financial resources. As a rule, we are talking about a unique offer, so manufacturers have the right to set the price for the product at their discretion (even very high).
Sometimes companies divide a niche intosub-groups, differentiate the product and make an offer in each sub-market (for example, variants of minibuses or cars with a small engine). A high level of income is provided by such factors as low costs for production, marketing, sales of products, uniqueness and originality of goods, etc. In this situation, marketing carried out by subgroups does not differ much in content and methods of activity.
Of the above types of market coverage strategies, this direction does not require large advertising costs, has a stable position in the field of sales, satisfies consumer needs, and therefore ensures income stability. At the same time, it is quite difficult in terms of conquering the segment, especially if it has competitors, and the limited area sets the framework for the production and sale of goods. This approach is about creating a specific product for specific customers, so it involves constant communication with consumers in order to understand their needs and convince them how important each customer is to the company. It is recommended to start this type of activity with coverage of 20% of the market (according to the Pareto principle, it is this share that, with proper marketing, will provide 80% of the result).
Important factors of the internal and external environment
In order to properly plan the development of the company, it is necessary to take into account some characteristics of production and reality. The following business components influence the choice of a market coverage strategy:
- resourcescompanies (if they are limited, then it is necessary to stop at concentrated marketing);
- uniformity of products (if the product lines are similar, then mass marketing is suitable for production and sales, if it differs in packaging, appearance, functions, then differentiated);
- product life cycle (to determine the strategy for reaching target markets, it is very important how long the offer will last from the moment of exit to complete disappearance (the stages of emergence, growth, maturity and decline are taken into account), because this significantly affects the scale of marketing activities; when launching a product, it is desirable to display only one variety - this will allow you to analyze the interest of buyers in it, in this case, mass or concentrated marketing is suitable, and when sales increase significantly, you can switch to differentiated;
- homogeneity of consumer requests (if the majority of consumers are interested in the same product and marketing actions affect them in the same way, then a mass market coverage strategy would be appropriate);
- ways to organize the work of competitors (as a rule, the company needs to act differently: if opponents have a common coverage of the sales area, then it should resort to differentiated or concentrated, if other manufacturers use the last two strategies, then achieve good sales the company will be able to offer the population mass-produced goods that meet the needs of a wide range of consumers).
It must be remembered that from the thoroughness of the analysisenvironment will depend on the correctness of the decision. By examining the potential market opportunities and knowing the pros and cons of market coverage strategies, stakeholders will be able to properly plan their activities and get the maximum benefit.
Steps in defining a strategy
The following steps precede the selection of a market coverage method:
- Market analysis and segmentation: carried out in order to determine the niches in which the product will be most interesting to buyers and it will be possible to ensure a high level of sales, studying the volume of segments, their potential and acceptable growth in sales, the number of potential buyers, their motives for making shopping.
- Determining the product lines of the manufacturer and the client groups to which they will be offered. To select a market coverage strategy for an enterprise, it is necessary to study the purpose of the product, the degree of satisfaction of consumer requests by this offer, the compliance of products with state standards, the level of costs for manufacturing the product and the need to modify it in the future in connection with scientific and technological progress.
- Analysis of competitors. The circle of the largest opponents (3-4) is determined, their product lines on the market, features, quality, product design, prices, marketing programs, development of new products, etc. are studied. companies that need to be surpassed by making their offer more interesting and profitable.
- Choosing direction in workorganizations.
Basic signs in decision making
The criteria for choosing a market coverage strategy include:
- Measurability (this includes various characteristics of the niche: size, payment options of consumers, the scale of the necessary marketing activities, etc.).
- Availability (to what extent a company can reach a group of consumers and satisfy its needs).
- Significance (a segment is a group of buyers with similar interests, it must have sufficient purchasing power for a marketing program designed specifically for it to justify itself).
- Differentiability (provides for a homogeneous reaction of customers to the proposed unit of goods, on its basis the number of these buyers is allocated to a single group).
- Possibility of active influence within the segment (provides for the development of a program for introducing into a niche, active advertising and promotion of goods that are interesting to buyers).
The importance of work priorities
All business organizations differ in specifics, goals, scale, resources. But choosing the right strategy to reach strategic market segments allows:
- reduce production costs;
- make advertising effective;
- use available resources rationally;
- plan properly for further business expansion;
- by satisfying the interests of the consumer to ensure the maximum level of product sales;
- improve competitiveness;
- become a top seller in a market or segment.
Virtually every company is focused on "its" customer, and market coverage strategies in marketing are a way to identify the necessary market niche, optimize production and make an offer to customers that will fully satisfy the needs of consumers and ensure a high level of income for the organization.
