While undifferentiated marketing is efficient from a production viewpoint, there are inherent dangers in the strategy. A firm that attempts to satisfy everyone in the market with one standard product faces the threat of competitors offering specialized products to smaller segments of the total market and better satisfying each segment. Indeed, firms that implement a strategy of differentiated marketing or concentrated marketing may capture enough small segments of the market to make the strategy of undifferentiated marketing unfeasible. Differentiated Marketing Firms that produce products with different marketing mixes that are designed to satisfy smaller segments are said to practice differentiated marketing. This strategy is still aimed at satisfying a large part of the total market, but instead of marketing one product with a single marketing program, the organization markets a number of products designed to appeal to individual parts of the total market.
Most firms use differentiated marketing.
They can provide an increase in satisfaction for each of its segments and produce more sales than would be possible with undifferentiated marketing. In general, however, the costs are greater, too. Production costs usually rise because additional products mean shorter production runs and increased setup time. Inventory costs rise because of added space needs for the products and increases in the necessary recordkeeping. Promotional costs also increase because unique promotional mixes are required for each market segment.