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While an undifferentiated strategy offers reduced costs through increased production, it does not allow for variety or tailoring to specific needs. Through differentiation, products—or advertising appeals—may be developed for the various segments, increasing the opportunity to satisfy the needs and wants of various groups.

The third alternative, concentrated marketing, is used when the firm selects one segment and attempts to capture a large share of this market. Volkswagen used this strategy in the 1950s when it was the only major automobile company competing in the economy-car segment in the United States. While Volkswagen has now assumed a more differentiated strategy, other companies have found the concentrated strategy effective. For example, Maxwell Business Systems has focused its business exclusively on providing software for job cost accounting/MIS systems for government contractors through its JAMIS product line (Exhibit 2-11).

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