Businesses and marketers can choose different marketing strategies to resonate its message to promote products and services effectively. Different marketing strategies are available to create and implement successful marketing campaigns. Differentiated marketing is one of the marketing strategies we will discuss here.
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What is Differentiated Marketing Strategy?
Differentiated marketing strategy, also known as multi-segment marketing, enables a company to appeal to multiple customer segments and target groups with a different marketing message for each. It is a combination of both concentrated marketing and undifferentiated marketing. Though differentiated marketing can generate higher sales than that of concentrated or undifferentiated marketing; however, this is done at the cost of increased expenses.
Features of Differentiated Marketing
- The company should be able to appeal to two or more clearly defined customer segments with a particular product and a unique marketing strategy tailored for every segment.
- Here the company’s capabilities and resources are the crucial factors in the success of differentiated marketing. These factors enable the company to produce and market different products.
- Differentiated marketing should help a company attain diversification, sales maximization, and recognition as a specialist in the industry to satisfy different segments.
- The company is required to appeal to two or more segments (sizeable and distinctive). In this case, more relevant customer segments mean more opportunities for differentiated marketing.
- If the number of segments catered increases by the company, it should have the same effect on profits.
- This strategy is more suitable and applicable to wholesale and retail businesses. These businesses have a wide reach to different consumers groups.
- A company is required to maintain product distinctiveness within every customer segment and take care of its brand image.
- A company is required to balance revenue generated from multiple segments to the costs associated.
Differentiated vs. Undifferentiated Marketing strategy
The purpose of designing a marketing strategy is to create a detailed approach and maintain focus over a marketing campaign. Differentiated and undifferentiated or concentrated marketing strategies are two such approaches and both can be advantageous in different situations.
Differentiated marketing strategy
Companies that use differentiated marketing strategies create campaigns that tend to appeal at least two distinct consumer segments. For example, a store promotes sale that appeals to people from at least two locations (cities) or it can market its products which appeal to at least people from two age groups.
Additionally, differentiated strategies also use differentiated messages in one campaign for different segments. An example can be that a retailer markets the product as low cost to budget-conscious segment and product quality to an affluent market segment.
Undifferentiated marketing strategy
An undifferentiated marketing strategy allows marketers to make use of one message in every market segment. This is quite similar to mass marketing, and marketers can create a message that can attract everyone so the message is more in generic terms and expands ways for people to relate to it.
Differentiated Marketing Examples
A good example can be Maruti-Suzuki, which uses differentiated marketing and targets all segments. On the other side, Microsoft and Hyundai tend to appeal to two or more segments, but not every segment.
For example, a restaurant can target both college students and families. The restaurant can offer cheap food and drink menus for college students. On the other hand, it can also appeal to a kid-friendly environment and meal options for families.
Advantages of Differentiated Marketing
Companies can easily target those niche markets where competitors do not have suitable offerings to satisfy consumers. Companies who have the best fitting offers are the ones who have the greatest potential of generating profits.
Effective Resource Allocation
In every market, customer needs and preferences are varying. When a company focuses on market differentiated strategy and segmentation is based on customer needs and preferences, it is easy for the company to allocate available resources effectively. It will help the company to have a bird eye view on overall marketing goals and accomplish the goals.
Disadvantages of Differentiated Marketing
Customizing products and marketing it to each customer group is an expensive activity. Creating different versions and variation of a product means more research and development time and cost than creating a single product. Moreover, to present distinctive messages, companies need to market and sell the product to appropriate target groups heavily.
Differentiated marketing usually emphasize on product quality and the service offered as its key value propositions. They are not often low-cost options and can compete against those firms that can offer reduced prices. Product diligence is a must so as to sell value and quality to customers.