The times when one or two services dominated most industries are long gone. The homogeneous market has entered the minds of consumers for good, and customers often have a choice of dozens of solutions that are almost identical. That is why your image in the eyes of customers and the amount of your profits depend to a large extent on how you plan your marketing.
What is a homogeneous market?
In such a market, each of the products on offer is more or less the same as all others when it comes to essence. They may differ from each other in only minor characteristics, such as:
- price,
- additional functions,
- design and branding.
The model homogeneous market is very competitive.
Another homogeneous classification defines a market that is homogeneous in terms of the offered products (e.g. the footwear market, the dairy market) and a heterogeneous market, i.e. diversified in terms of the products offered (e.g. the market for extracurricular activities, the catering market).
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Advantages and disadvantages of market homogeneity
From the customer's point of view, a homogeneous market has only advantages. The choice is large and it can be said that it is a situation in which companies strive for the customer's attention, and not the other way around. It is not surprising that many countries and industries have anti-monopoly measures in place – thanks to them, this situation is expected to continue.
On the other hand, companies are constantly trying to get around such restrictions. Less choice for the client means a better market situation for such an entity. This is clearly seen in on the internet. Facebook has already bought Instagram and Whatsapp, and Google has the platform Youtube. It is already conducive to the market monopoly of two companies, hence the loud protests of governments and organizations when talking about their merger. This situation could lead to less competition and thus less choice and poorer conditions for customers.
The disadvantage of a homogeneous market may in turn be the so-called "Harvest defeat". Too much choice, especially when it comes to basic products, sometimes completely discourages from buying in a given category. This problem has affected, for example, large shopping malls. More and more people go to a local store or discount store for basic products to spare themselves the dilemma of too much choice. Another disadvantage of the homogeneous market may be low customer loyalty. The participants of the group shopping programs that were fashionable a few years ago were very painfully aware of it. Customers chose gyms, hairdressers or restaurants only in connection with the current promotion and switched to the next company during the next one. Later, business owners complained that this had not earned them any loyal customers in the long run. Therefore, before implementing a specific tactic, it is worth doing marketing audit and check which strategies have worked in the past and which factor should be exposed this time in the homogeneous market.
Homogeneous market - examples of activities
This type of situation can occur in virtually any industry. For example, all the most popular hair shampoos fulfill the same task. It is the additional and less significant factors (smell, packaging) that determine which of them the customer will decide. Another good example is the gasoline market where all products are virtually identical. It is subtle price differences or additional services (loyalty program, restaurant at a gas station, opening hours) that determine the choice. Another such market is the segment of black tea in teabags. Actually, only the price makes the customer choose one brand over the other.
It is common practice in the homogeneous market price positioning. It is about distinguishing the product from the competition through the pricing policy. There are examples of electronics or cosmetics, the price of which is very high after launching on the market, and it is this distinguishing feature that ignites the imagination of customers. Other tactics are sale or price packages (2 for the price of 1, the fifth product free, etc.) or simply the price kept constantly lower than that of the competition for the same product. In a crowded homogeneous market, being the cheapest of many can also be an important differentiator. The situation on the Internet services market is special. In essence, each provider's email or storage space is identical, hence the different strategies adopted by the providers. They stand out with a visual layer or an adopted character, but often these differences do not allow them to stand out from the others.
Sometimes the differences between goods on a homogeneous market are limited to the pricing policy. One such company may offer the service for free for a certain period of time and then charge you a subscription for a year. Another sets a single, fixed rate for an unlimited number of uses of the product. Another one may charge a small fee for one-time or one-day use of the product, and offer various price packages for longer use. The price may also be temporarily modified; for example, the first 500 people pay only this much, and the next ones have to spend more. All these are examples of activities that work well in a homogeneous market.
As this market model is used more and more, new ideas are constantly emerging on how to distinguish the product from the competition through marketing. For example, when it seemed that the cosmetics or food market was too saturated with similar products, it appeared eco-marketing. Today, bio-carrots or vegan cream stand out from the competition, although in fact the differences are often limited to the ideological layer of the message.
The homogeneous market and the heterogeneous market
At the other extreme of the market classification based on the degree of homogeneity, it is located heterogeneous market. It can mean a complete lack of opportunities to compete, such as in the apple market. In most stores, you can only find one or two types of apples. The manufacturer is not important from the customer's point of view and he does not see any differences between the products of different brands. In a broader sense, a heterogeneous market is one in which goods are completely different from each other in terms of their essential characteristics. An example is the transport market, where airline tickets, bus tickets and shared journeys are fundamentally different from each other.
In both approaches market orientation is important, but there will be different methods to achieve the goal of customer acquisition. If you want to know more about our ways to build a marketing strategy - please contact us.
Homogenous market - questions and answers
What is a homogeneous market?
One of the definitions states that a homogeneous market is homogeneous in terms of the products offered and very competitive. Products may differ from each other in such secondary features as price, additional features or branding.
What is price positioning?
This is a common practice in a homogeneous market. It consists in distinguishing products from the competition with the help of a pricing policy. In practice, these are, for example, any promotions or constantly maintaining a price lower than the competition.
What does the term heterogeneous market mean?
A heterogeneous market is characterized by the fact that the goods offered on it are different in terms of their essential characteristics. This market may not provide an opportunity to compete, and the manufacturer itself is not important to the customer in this case.