Assignment 16-18

Group 4

1. Marketers have a range of possibilities on a continuum from mass market to

customization when thinking of their target market decisions. Discuss the various options
that organizations may pursue with appropriate examples of each.

Mass Marketing: Mass marketing is a market coverage strategy in which firms ignore market
segment differences and appeal the whole market with one offer or a single strategy. It goes for
highest number of potential customers and ignores the niche demographic differences. The
company is focused on higher sales volume at lower prices to obtain maximum product
exposure. Certain features of mass marketing are as follows:

 It is targeted towards a huge group of individuals

 Mass media is used extensively for spreading the message about the product
 This strategy is used by majority of the companies to create a brand image and brand
recall or to introduce new products in the market.
 Usually associated with general purpose products that have an appeal to a broad base of
customers

Example of mass marketing can be Tide detergent, Colgate toothpaste, Dove (soaps). Mass
marketing is very prominent in the FMCG industry. The medium used for mass marketing can be
social media, television, radio, newspaper, magazines, etc.

Niche Marketing: Niche marketing is a very concentrated form of marketing. Unlike some other
forms of marketing that target a broad range or large group of consumers, niche marketing
involves targeting a very specific, well defined segment of the market. Niche marketing often
focuses on market segments that are poorly targeted, or not targeted at all. Marketers identify the
niches to target by identifying the desires and needs of consumers in specific segments.
Efficiently tailoring a marketing campaign to a niche audience is crucial. Niches usually go un-
targeted because smaller companies are unaware that the niche exists, and larger companies
don’t think that targeting a small niche is worth their time. Companies that target these niche
audiences will be endowed with first-mover advantages that give the company better positioning
against new competitors.

Strategies involved in niche marketing:

 Finding the firm’s strength and interests: The best niche marketing strategies play into the
company’s brands and perspectives.
 Doing proper industry research: Competitive analysis is a must to see if there are any
competitors in that space and how are they faring. It’s important to identify if there is any
opening in the target market and that should be adequately addressed.
  Getting to know their customer: Getting to know one firm’s perfect customer helps the
firm to offer a better quality product or a service.

Example of niche marketing can be organic foods. These are more expensive but promise quality
and are considered better for the environment. Other examples can be the vegan foods that cater
exclusively to people who are vegetarians and are averse towards dairy products.

2. The market leader must work hard to stay on top of the market. Describe the different
strategies that can be used by a market leader. Discuss with an example.

To stay at the top, a market leader needs to do three things:

First, it needs to find ways to expand total market demand. Second, it must protect its current
share through good defensive and offensive actions. And third, it must increase its market share
even if market size remains constant.

 Expanding total market demand

If the market leader expands its demand in the market, it will automatically gain the most
out of it. The market leader should look for new customers or more usage from existing
customers.
A company can search for new users among three groups – those who might use it but
don’t (market penetration strategy) e.g. Patanjali Ayurveda. Users of other FMCG brands
might use Patanjali products.
Those who have never used it (new market segment strategy) e.g. Maruti Suzuki cars
attract first time buyers or those who are switching from 2 wheelers to a 4 wheeler.
Those who live elsewhere (geographical expansion strategy) e.g. Mercedes Benz India
considers Tier II and Tier III cities as a major market and plans to expand to these cities.
Marketers can try to increase the frequency of consumption. This can be done by
packaging or product redesign. Larger package sizes increases the consumption each time
a consumer buys the product. However increasing frequency of consumption requires:
(i) Identifying additional opportunities to use the brand: A marketing program can
communicate the appropriateness and advantages of using the brand. Another
opportunity arises when consumers’ perceptions of their usage differs from
reality. Consumers may fail to replace a short lived product when they should
because they overestimate how long it stays fresh. For e.g. Gillette razor
cartridges feature coloured stripes that slowly fade with repeated use indicating
that it’s time to switch to a new cartridge.
(ii) Identifying completely new and different ways to use the brand: Identify
completely new and different applications. For e.g. Cadbury dairy milk promoted
it’s chocolate as a way to celebrate academic results or as a dessert after dinner
thus trying to position itself as a substitute for Indian sweets.
 Protecting Market share
The market leader must innovate continuously and develop new products and customer
services, distribution effectiveness, and cut costs. These can be done by:
 Proactive marketing: To satisfy customer needs, we can draw a distinction
between responsive marketing, anticipative marketing and creative marketing. A
responsive marketer finds a stated need and fills it, an anticipative marketer
identifies the needs a customer may have in the near future and a creative
marketer finds solutions to the problems customers didn’t ask for but to which
they enthusiastically respond. Creative marketers are proactive market driving
firms, not just driven ones. A company needs two proactive skills: (1) Responsive
anticipation and (2) creative anticipation. Proactive companies create unmet and
unknown consumer needs. Proactive companies may redesign relationships within
an industry or educate their customers. Proactive firms are not risk averse, have a
vision of the future and of investing in it, capable to innovate, flexible and non
bureaucratic and have managers who think proactively.
 Defensive marketing: To reduce the probability of an attack, divert attacks to less
threatened areas, and lessen their intensity. There are six defense strategies:
(i) Position defense: Occupying the most desirable market space in
consumer’s minds e.g. Parle G biscuits, Gillette razors, Dettol
antiseptic products.
(ii) Flank defense: Market leader should erect outposts to protect a
weak front or support a possible counterattack e.g. Nestle India
rolled out the first sub-brand of Maggi 2 minute noodles under the
brand Hot heads to widen its consumption base.
(iii) Preemptive defense: A leader attacks an enemy before it can start
an attack e.g. Ola launched Ola shuttle to offer a shuttle bus service
to urban commuters before Uber could come up with this idea.
(iv) Counteroffensive defense: The market leader can meet the attacker
frontally and hit its flank, forcing the competitor to focus on
defending its own territory. Another common form of
counteroffensive is to exercise economic or political clout. For e.g.
Jio leveraged it’s economic power and disrupted the telecom
industry by offering cheap data services which others could not
offer.
(v) Mobile defense: A leader broadens and expands its territories into
new market areas by diversifying. E.g. Coca Cola entered India’s
dairy products market with VIO flavoured milk.
(vi) Contraction defense: This is also called strategic withdrawal.
Market leaders give up weaker markets and reassign resources to
stronger ones. E.g. Maruti Suzuki Kizashi was a luxury sedan
 which could only sell 396 units in 2012 and was discontinued soon
after.
 Increasing market share: Companies can continue to stay at the top by increasing their
market share. The company should consider four factors first:
(i) Possibility of provoking antitrust action: Competitors can seek legal action
if they think there’s a monopoly and a lot of company’s resources and
time may go towards fighting lawsuits.
(ii) Economic costs: Profitability might fall with market share gains after
some level. Pushing for higher share is less justifiable when there are
unattractive market segments, buyers who want multiple sources of
supply, high exit barriers and a few scale or experience economies. Some
market leaders have even increased profitability by selectively decreasing
market share in weaker areas.
(iii) Danger in pursuing wrong marketing activities: Companies that attempt to
increase market share by cutting prices more deeply than competitors
typically don’t achieve significant gains, because rivals meet the price cuts
or offer other values so buyers don’t switch.
(iv) Effect of increased market share on actual and perceived quality: A wider
customer base can make it difficult to cater to their needs and can result in
customer dissatisfaction. This can hurt product value and put a strain on
the firm’s resources.

3. Elucidate the strategic choices available to a marketer of a product in decline stage, with
an example.

When a product is in decline stage, the marketer can pursue the following strategies:

 Withdraw from the market: As sales and profits decline over a long period of time, many
companies either withdraw their products from the market or reduce the number of
products they offer. Unless there are strong reasons for the product to exist, carrying a
weak product is often very costly. These weak products take up a lot of management’s
time, require frequent price and inventory adjustments, expensive setup, take up
advertising and sales force attention and sometimes cast a negative shadow on company’s
image.
 Establish a system to identify aging products: Appoint a product review committee with
representatives from marketing, R&D, manufacturing, and finance who can make a
recommendation whether the company should continue with the product, modify its
marketing strategy or drop it completely.
 Identify when to abandon the declining market: Based on the exit barriers involved, a
company should assess and abandon the declining market earlier than others. The lower
 the barriers, the more easier it is for the firms to leave the industry and the more tempting
it is for the remaining firms to stay and attract the withdrawing firms’ customers.
 Identify attractiveness of the industry and your competitive strengths: A company in an
unattractive industry that possesses competitive strength should consider shrinking
selectively. A company in an attractive industry and possessing competitive strength
should consider strengthening its investment. Companies can prevent a product in mature
stage from sliding to decline stage by adding value to the product.
 Harvesting: It means to gradually reducing a product or business’s costs while trying to
maintain sales. The first step is to cut R&D costs and plant and equipment investment.
The company might also reduce product quality, sales force size, marginal services, and
advertising expenditures without letting customers, competitors and employees know.
This is difficult to execute, but it can substantially increase current cash flow.
 Divesting: A company can divest a product with strong distribution and residual goodwill
by selling the product to another firm. The firms that acquire these products can
capitalize on the residue of brand awareness in the market which otherwise would take up
a lot of capital.
 Lower the price and advertise based on that lower price: Those customers who left the
brand for superior, more differentiated competitor may return for savings. Another
strategy could be to offer heavy discounts to your wholesale/retail distributors and they
will push the product to maintain sales volume. However this is a temporary strategy.

An example of a product in decline stage is VCR. VCRs were popular even in the beginning of
21st century and could be found in anyone’s home. However with the rise of streaming services
like Netflix and Amazon prime, VCRs have been effectively phased out.