The mass market strategy

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Table of Contents

Market Segmentation
Mass Market Strategy
Concentration Strategy
Multi-segment Strategy
Choice of Approach
Targeting
Positioning
Implementation
Reference List

Market Segmentation

When examining the details of the example the following are the 3 possible approaches that Robert Bennett could pursue when it comes to his company:

Mass Market Strategy

The mass market strategy primarily focuses on appealing to a wide range of possible consumers within a given market. For example, in the case of appliances such as microwaves, refrigerators or ovens, there is no single specific segment of the population that these appliances attempt to target aside from people that have need for and can afford them. This means that demographics related to age, race, level of education, ethnicity etc. do not factor into the marketing strategy decision.

Instead, when a mass marketing strategy is implemented it is normally the case it attempts to appeal to consumers based on uniqueness, affordability, functionality etc (Develop consumer-relevant positioning, ads with occasion-based segmentation analysis 1982, pp. 8-16).

While such a strategy enables a company to target a broad segment of the population, it is also likely that the lack of an emphasis on a single population could “stretch the company too thing” so to speak making it unable to properly target the segments where it would make the most profit.

This strategy focuses on ordinary consumers that shop at various retail locations such as Wal-Mart, Target, etc. In this particular instance, the appeal of the MicroFridge focuses on the fact that they can get two devices in one instead of having to purchase the devices separately. Not only that, given the new electric circuitry system that Mr. Bennett devised, consumers would be able to save on power costs in the long run as a result of the fridge turning off whenever the microwave was turned on.

Through the analysis of Wright (2008), it was seen that the sale of combined gadgets (i.e. washer-dryers, oven-microwaves, etc.) has actually been increasing within the past few years given the general appeal such items have on budget conscious consumers. They view multipurpose gadgets as being far more cost effective and appealing since it saves them money as well as space.

The disadvantage though of utilizing retail sales channels is increase in the overall price that will undoubtedly occur by selling it through retailers as well as the fact that the MicroFridge would be competing directly against other well known brands.

While it may be true that the available appliances in the same product category do not have the versatility of the MicroFridge, the fact remains that brand recognition goes a long way towards creating consumer patronage which the MicroFridge unfortunately does not have since it is a new product on the market.

Concentration Strategy

The concentration strategy normally focuses on appealing to a specific segment of the population that would be more likely to purchase a particular set of products or services (Ostasevičiūtė & Šliburytė 2008, pp. 97-103). In the case of the MicroFridge, a concentrate market segmentation strategy would be to focus on a segment of the population with the highest level of demand, which in this case represents the student population at colleges and universities.

The advantage of such a method is that it allows the company to concentrate its resources on the segment of the population where it knows where it can make the most profit. On the other hand, its disadvantage is that it ignores other potential markets in the process.

Multi-segment Strategy

The multi-segment strategy focuses on different marketing mixes wherein the company attempts to target multiple different segments (Ying et al. 2010, pp. 880-894). This differs from the mass market strategy since in this case the company targets multiple but very specific market segments.

For example, along with colleges/ universities, another potential segment that can be targeted are low cost motels/hotels that cater to travelers such as truck drivers, salesmen, and other people that spend significant amount of times on the road.

Based on the data that was presented in the case, it was noted that motel/hotel guests were willing to have $3 added to their room charge for the use of the MicroFridge. Through the analysis of Schmid et al. (2008), it was noted most travelers who stay at low cost motels/hotels do so out of necessity due to the limited amount of funds they have.

As a result, a MicroFridge would be appealing to them since Schmid et al. (2008) indicates most of these individuals buy food from local grocery stores and eat it at the motel/hotel due to the need to conserve cash which is also similar to what happens to college students.

When taking this into consideration, having MicroFridges within a Super 8 motel for instance would increase the overall appeal of the motel over its rivals given due to the manner in which the customer segment that they target consumes their food. The same can be said for campus based dormitories as compared to their off-campus counterparts.

The one disadvantage though of this particular segment is that most Super 8s and small motels already have a small mini fridge inside of the rooms and most campus dorms do have a mini-fridge. As such, in order to target this specific segment it would be necessary to convince the owners of the motels/hotels and colleges/universities to get rid of their current mini-fridges and invest in the MicroFridge.

Choice of Approach

When taking into consideration all the approaches that have been presented so far, the best approach would be a concentrated segmentation strategy that targets college/universities. The reason behind is connected to two specific factors, namely: the presence of demand and long term brand recognition.

In colleges/universities there is a definite demand for the type of appliance that the MicroFridge represents and, as such, it is very likely that it would create widespread acceptance especially when taking into consideration the fact that it would be far safer as compared to the use of hotplates which have a history of causing fires.

From a brand recognition point of view, studies such as those by Sinha & Rosenthal (2009) emphasize “getting them early” in that consumers are more willing to patronize a brand in the long term the earlier they are introduced to it. This is one of reasons why credit card companies often have booths during college events since by “hooking” them early on; students become future long term customers of the bank.

The same strategy can be utilized in the case of the Microfridge wherein by introducing the brand to students while they are in their college/university years, they are more likely to buy it later on when they have their own apartments since they recognize the brand.

Targeting

When it comes to choosing a specific market segment to target, the criteria would be the following:

Which specific segment has the greatest potential for demand?
Where would brand recognition result in more future sales for the company?
Which segment has the greatest potential for future sales?
Which segment has the financial capacity to support the expansion of the company in the future?

It is based on this that the chosen segment that the company would target would be the colleges/universities since they represent the segment that fulfills all the indicated criteria. Not only that, there are thousands of college/university dorms within the country and, as such, this enables the company to potentially serve thousands of potential clients.

Positioning

The market position that the company will occupy initially is that of the best supplier of the MicroFridge appliance to colleges and universities. By positioning itself in such a way, this will enable the company to access the thousands of college/university dormitories all around the country.

Not only that, this market positioning strategy helps to create significant levels of brand recognition which will serve the company well in the future should it choose to expand into markets composed of people that live in small cramped apartments which is where college/university students usually wind up after they finish their studies.

Implementation

Through the study of Anderson & Narus (1990) it was seen that college students are often cash strapped and, as a result, cannot eat out often and have to rely on making their own food. This often results in them boiling water through hot plates to cook instant ramen or to fry food on pans. However, such a need is not limited to the need to cook but also extends to the need to store drinks, food and snacks in such a way that they do not rot easily.

The issue with having both a hot plate and a refrigerator running at the same time is the cost of electricity. Furthermore, using hotplates within the confines of cramped college dormitories have resulted in numerous fires which forced the hand of college supervisors to ban their use given the potential for such devices to burn down the entire dormitory. Despite this, hotplates continue to be a widely used item within college dormitories.

The advantage of a marketing strategy that specifically targets students who live in college/university dorms is that there is a significant level of demand within this target market for the type of device that Mr. Bennett will attempt to sell. In fact, based on the analysis of the student surveys from Atlantic Research, it was shown that students wanted to use the MicroFridge to the extent that they would be willing to pay $75 extra per year on their college dorm room fees.

The disadvantage though of this particular segment of the population is that the people who are in charge of the purchasing decision (i.e. the college/university administrators) are hesitant towards the idea given the fact that the company is still within its infancy and, as such, there is no guarantee that it will still be around to provide the necessary maintenance to the machines themselves.

It is based on these factors that the company’s revenue model will focus on a long term brand recognition strategy that specifically focuses on colleges and universities. The initial marketing strategy will focus on showing how there is demand within individual student populations in specific universities for the MicroFridge.

By showing that there is demand, this helps to establish a base from which Mr. Bennett can convince the school administrators of the need for the MicroFridge, especially when taking into consideration the various problems with hotplates. It is at this point that the company will emphasize its partnership with Samsung Electronics and Sanyo Electric to show that there are large brand name companies that are willing to work with the company on the product.

Lastly, the company’s revenue model in the case of colleges and universities will focus on allowing the colleges/universities easy payment terms wherein they can pay for 50% of the price of the units now and pay for 50% of the costs the year after with parts and warranty for 2 years included in the sale of items.

Should the university find any problems or experience lackluster demand, the units can be returned with the full payment being given back to the college/university. The reason behind implementing this type of revenue model is due to the fact that the sheer lack of brand recognition goes against the company and, as such, it is necessary to build some form of trust between the buyer and seller.

By reducing the amount of risk on the part of the buyer by spreading out the payments and ensuring that the units can be returned with a full refund if there is insufficient demand, this creates a level of trust which makes them more likely to purchase the units (DeSarbo, Grewal & Scott 2008, pp. 280-292).

Once they see demand increase and the overall effectiveness of the units themselves, future contract negotiations can proceed as normal with a change in the revenue model. The most important factor is to get the company’s “foot in the door” so to speak so that the product itself can become more popular resulting in higher amounts of future sales.

Reference List

Anderson, J, & Narus, J 1990, ‘“Value-based segmentation, targeting, and positioning”’, AMA Winter Educators’ Conference Proceedings, vol. 1, p. 44

DeSarbo, W, Grewal, R, & Scott, C 2008, ‘A Clusterwise Bilinear Multidimensional Scaling Methodology for Simultaneous Segmentation and Positioning Analyses’, Journal Of Marketing Research (JMR), vol. 45, no. 3, pp. 280-292

‘Develop consumer-relevant positioning, ads with occasion-based segmentation analysis’ 1982, Marketing News, vol. 15, no. 23, pp. 8-16

Ostasevičiūtė, R, & Šliburytė, L 2008, ‘Theoretical Aspects of Product Positioning in the Market’, Engineering Economics, vol. 56, no. 1, pp. 97-103

Schmid, K, Rivers, S, Latimer, A, & Salovey, P 2008, ‘Targeting or Tailoring’, Marketing Health Services, vol. 28, no. 1, pp. 32-37

Sinha, J, & Rosenthal, E 2009, ‘The costs and perils of over-targeting in today’s markets’, Marketing Review, vol. 9, no. 3, pp. 243-250

Ying, L, Ram, S, Lusch, R, & Brusco, M 2010, ‘Multicriterion Market Segmentation: A New Model, Implementation, and Evaluation’, Marketing Science, vol. 29, no. 5, pp. 880-894

Wright, RE 2008, ‘Targeting, segmenting and positioning the market for college students to increase customer satisfaction and overall performance’, College Student Journal, vol. 42, no. 3, pp. 891-894

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