Differentiated marketing is a strategy that involves a company creating marketing campaigns that appeal to two or more segments of their target audience. It helps companies improve brand recognition, reach a wider audience, meet customers’ needs, and increase revenue.
Nowadays companies use various strategies to reach customers and achieve their goals. There are three main marketing approaches: differentiated, undifferentiated, and concentrated marketing. To start, let's dive into the advantages and disadvantages of differentiated marketing and then take a look at several examples.
Advantages and Disadvantages of Differentiated Marketing
Before launching any marketing campaign brands determine their target audience. Based on the offer they have for their customers, companies segment their audience according to common characteristics. Afterward, they communicate their offer and message to the selected segment to drive conversions. To create an effective campaign, each company selects the most relevant target market strategy, among them differentiated marketing. This strategy has the following advantages:
- the opportunity to clarify the actual needs and expectations of your customers;
- the chance to choose clients based on your brand's capabilities;
- offering the appropriate products to the right people;
- exploring the market and the position of your competitors within it;
- efficient use of company resources;
- increased revenue;
- fulfilled needs of customers.
However, as with any marketing strategy, differentiated marketing has its cons too. Some of the disadvantages of differentiated marketing include:
- increased costs on advertising to reach each market segment;
- customers may respond differently;
- limits in your business growth that may occur when targeting small groups of customers;
- a high level of competition among companies that provide consumers with products at a lower cost.
Now that you know the details of a differentiated marketing strategy, let’s find out the difference between the two target market strategies.
Differentiated Marketing vs Undifferentiated Marketing
When a brand creates campaigns for two or more segments of their target audience, it implements differentiated marketing. By targeting customers with certain common characteristics, companies manage to meet the needs and requirements of clients by providing them with relevant offers.
Differentiated marketing is a great fit for wholesale and retail businesses since they can reach different segments of the audience. When using this strategy companies rely on various promotion channels giving preference to platforms that meet customers’ needs. By doing this, brands are able to deliver more personalized messages and an exceptional experience. The strategy helps resonate with the needs of each segment and obtain loyal customers who will eventually recommend your brand to friends and colleagues.
Unlike differentiated marketing, undifferentiated marketing appeals to a wide range of people. Its main goal is to reach the maximum number of customers with one product, one price, one placement strategy, and one promotional campaign. In this strategy, the image remains important. Brands focus on quality, affordability, or a certain feature of their product. By providing customers with the best quality, brands aim at gaining a competitive advantage.
Undifferentiated products usually have a wide customer base. By using this strategy brands try to show that they offer products that people need in their everyday life. For example, personal care products. The advantages of undifferentiated marketing are recognition, getting a larger reach, and no need for research or specialized criteria of a specific campaign.
So now let’s jump into a differentiated marketing strategy and the steps necessary to create it.
Differentiated Marketing Strategy
By using this marketing strategy, a brand can create several campaigns that communicate a message to at least two segments of their audience. Let’s take an accessories store, for example. It could create an email campaign to promote a limited-time offer and appeal to people in different countries and cities, or clients from different age groups.
With this approach, your company can target even more segments. Shoe brands often develop marketing campaigns that aim at not only men and women but also customers from various age groups. Besides, companies can create different messages in the same campaign to reach various segments.
To create this target market strategy, consider several steps:
- Determine your target audience. The most essential step is to define who your main customers are. For this purpose, you need to single out the main traits of your customers such as their age, location, gender, marital status, employment, income, and all the necessary information that can help you segment them into groups.
- Define the unique needs of your customers. With the help of surveys, for example, find out what products your customers prefer and what services help them deal with their problems. Additionally, use analytics tools to track your consumers’ buying habits to figure out which products they purchase regularly.
- Create offers for different segments. Now that you know the needs of your customers, it’s time to provide them with your unique offers. For example, imagine one of your target segments prefers to purchase organic food. Keeping this in mind, and you can develop a special offer for this segment.
- Identify the promotional channels you want to use. To reach your customers, you need to select the appropriate ways to promote your products. For example, if your target groups most often use social networks then give a thought to developing promotional and advertising campaigns for social media channels.
Developing this strategy requires following the steps above. To see a differentiated marketing strategy in action take a look at several examples.
Examples of Differentiated Marketing
The options for effective differentiated marketing are endless. Check out these examples to grab some inspiration.
Let’s look at Lilly Pulitzer, a famous beachwear brand. In 2015, the company cooperated with Target to launch a more affordable line of clothing, cosmetics, and other goods. By providing customers with more affordable prices at more locations, the brand was able to drive demand, and acquire new loyal customers.
Let’s imagine a running shoe brand. The company specializes in designing sustainable sneakers from recycled and renewable materials for athletes who care about our environment. Additionally, they produce performance models of running shoes with less cushioning for those who are concerned with speed. It demonstrates that the company divides customers into segments to fulfill each consumer's unique needs.
For example, imagine a new hotel was opened. The hotel targets families with children. To satisfy the needs of their visitors, it provides parents with a special area designed for their children to play different educational games. Also, hotel residents can find a garden with custom-made swings for children. Moreover, it also allows people to bring their pets. For this purpose, the owners designed special pet-friendly rooms. By doing this, the hotel tries to target different segments.
Let’s take a ski resort, for example. They decided to create a promotional video to attract more clients during the bulk season. To target two segments, marketers created two promotional videos: the first one shows young people snowboarding, in the second one shows families skiing. Therefore, using both ads, this ski resort can appeal to younger and older people.
Differentiated marketing is a widely used strategy that helps companies reach different target markets and increase revenue. By creating differentiated campaigns, brands meet the needs of different segments.
- The article “5 Examples of Differentiated Marketing” on Simplicable defines the term and provides examples.
- The article “Definitive Guide to Differentiated Marketing (Plus How It Differs from Other Marketing Methods)” defines the term, provides readers with advantages of differentiated marketing, and explains the difference between differentiated, undifferentiated, and concentrated marketing.
Last Updated: 10.02.2021