156 CHAPTER8IDENTIFYINGMARKETSEGMENTS ANDSELECTING TARGET MARKETS
promises to be a moneymaker. This multisegment coverage strategy has the advantage
of diversifying the firm’s risk.
Consider a radio broadcaster that wants to appeal to both younger and older lis-
teners using selective specialization. Emmis Communications owns New York’s WRKS-
RM, which describes itself as “smooth R&B [rhythm and blues] and classic soul” and
appeals to older listeners, as well as WQHT-FM, which plays hip-hop (urban street
music) for under-25 listeners.^31Product Specialization
Another approach is to specialize in making a certain product for several segments.
An example would be a microscope manufacturer that sells microscopes to university
laboratories, government laboratories, and commercial laboratories. The firm makes
different microscopes for different customer groups but does not manufacture other
instruments that laboratories might use. Through a product specialization strategy,
the firm builds a strong reputation in the specific product area. The downside risk is
that the product may be supplanted by an entirely new technology.Market Specialization
With market specialization, the firm concentrates on serving many needs of a particu-
lar customer group. An example would be a firm that sells an assortment of products
only to university laboratories, including microscopes, oscilloscopes, and chemical
flasks. The firm gains a strong reputation in serving this customer group and becomes
a channel for further products that the customer group could use. However, the down-
side risk is that the customer group may have its budgets cut.Full Market Coverage
Here a firm attempts to serve all customer groups with all of the products they might
need. Only very large firms can undertake a full market coverage strategy. Examples
include IBM (computer market), General Motors (vehicle market), and Coca-Cola
(drink market). Large firms can cover a whole market in two broad ways: through
undifferentiated marketing or differentiated marketing.
Inundifferentiated marketing,the firm ignores market-segment differences and
goes after the whole market with one market offer. Focusing on a basic buyer need, it
designs a product and a marketing program that will appeal to the broadest number
of buyers. To reach the market, the firm uses mass distribution backed by mass adver-
tising to create a superior product image in people’s minds. The narrow product line
keeps down costs of research and development, production, inventory, transportation,
marketing research, advertising, and product management; the undifferentiated
advertising program keeps down advertising costs. Presumably, the company can turn
its lower costs into lower prices to win the price-sensitive segment of the market.
Indifferentiated marketing,the firm operates in several market segments and
designs different programs for each segment. General Motors does this with its various
vehicle brands and models; Intel does this with chips and programs for consumer,
business, small business, networking, digital imaging, and video markets.^32
Differentiated marketing typically creates more total sales than does undifferentiated
marketing. However, the need for different products and marketing programs also
increases the firm’s costs for product modification, manufacturing, administration,
inventory, and promotion.
Because differentiated marketing leads to both higher sales and higher costs, we
cannot generalize regarding this strategy’s profitability. Still, companies should be cau-
tious about oversegmenting their market. If this happens, they may want to use coun-