Differentiated marketing strategy, also known as segmentation marketing, is an approach businesses use to target multiple market segments with different marketing strategies. In other words, instead of creating a generic campaign targeting all consumers, the company develops unique strategies designed to appeal to each market segment.
These market segments can be defined by various factors such as age, income level, geographic location, purchasing behaviors, or lifestyle preferences. For each segment, a unique marketing mix (product, price, place, and promotion) is designed to match that segment’s specific needs and wants.
Differentiated marketing can offer several benefits:
- Better customer understanding: By dividing the market into smaller segments, companies can gain a more in-depth understanding of their customers’ needs, preferences, and behaviors, enabling more personalized and effective marketing strategies.
- Competitive advantage: Differentiated marketing can allow companies to compete in multiple market segments, offering different value propositions to different customer groups. This can enhance their competitive positioning and market reach.
- Optimized resource allocation: Businesses can allocate their marketing resources more efficiently by focusing their efforts on the most profitable segments or those with the highest growth potential.
- Customer loyalty and satisfaction: By addressing different customer groups’ specific needs and wants, companies can increase customer satisfaction and loyalty, contributing to repeat business and positive word-of-mouth.
However, it’s worth noting that differentiated marketing also has its drawbacks. It can be more costly and complex to implement than undifferentiated marketing (mass marketing) because it requires developing and managing separate marketing mixes for different market segments. Therefore, this strategy requires careful planning and management to ensure its success.
Product differentiation Strategy in marketing with types & examples
How to create a differentiated marketing strategy?
Creating a differentiated marketing strategy involves several key steps:
- Market Segmentation: The first step is to divide your market into distinct groups of consumers who have similar needs, wants, behaviors, or characteristics. Segmentation can be based on a variety of factors such as geographic location, demographic information (age, gender, income, education, etc.), psychographic factors (lifestyle, attitudes, values, etc.), or behavioral aspects (usage rate, brand loyalty, etc.).
- Target Market Selection: Once the market has been segmented, the next step is to decide which segments to target. This typically involves evaluating the attractiveness of each segment based on its size, growth potential, profitability, competitive landscape, and fit with the company’s resources and capabilities.
- Unique Marketing Mix for Each Segment: For each targeted segment, design a unique marketing mix (product, price, place, and promotion) that specifically caters to the needs and wants of that segment. This can involve developing different products or versions of a product, adopting different pricing strategies, using different distribution channels, and creating different promotional campaigns for different segments.
- Implementation and Monitoring: Once the differentiated marketing strategies have been developed, the next step is implementing them and monitoring their performance. This can involve tracking various metrics such as sales volume, market share, customer satisfaction, or return on investment (ROI) in each segment to evaluate the effectiveness of each strategy and make necessary adjustments.
- Continuous Improvement: The marketplace is dynamic, and customer needs and preferences can change over time. Therefore, it’s important to regularly review and update your differentiated marketing strategies based on customer feedback, market trends, competitive dynamics, and changes in the business environment.
Remember that creating a differentiated marketing strategy requires a deep understanding of your customers and the market, a clear definition of your value proposition for each segment, and the ability to communicate and deliver this value to your targeted segments effectively. Therefore, it’s a process that requires careful planning, execution, and ongoing management.
Brand Positioning Strategy in Marketing with Types & Examples
Types of differentiated marketing strategies
Differentiated marketing strategies are typically categorized based on the types of market segmentation they are using. Here are several types of differentiated marketing strategies corresponding to different forms of market segmentation:
- Demographic Differentiation: Different marketing approaches are used for different demographic groups in this strategy. This can include age, gender, income, education level, and more. For example, a clothing company may have separate marketing strategies for men and women, or a car company may market luxury cars to high-income individuals and budget cars to lower-income individuals.
- Geographic Differentiation: Here, different strategies are used for different geographic areas. This can be as broad as different countries or as narrow as different neighborhoods. For example, a fast-food chain may offer different menu items or run different promotions in different regions based on local tastes and preferences.
- Psychographic Differentiation: This strategy targets different consumer groups based on lifestyle, personality, values, attitudes, etc. For example, a travel company may market adventure vacations to thrill-seekers and luxury vacations to consumers who value comfort and relaxation.
- Behavioral Differentiation: This strategy targets consumers based on their behaviors, such as their purchasing behavior, usage rate, brand loyalty, etc. For example, a software company may offer different subscription plans to light and heavy users, or a retailer may send special offers to its most loyal customers.
- Product Differentiation: Here, a company offers different versions of a product to different market segments. For example, a software company may offer a basic version of its software for casual users and a professional version with more advanced features for business users.
It’s important to note that these strategies are not mutually exclusive and can be combined. For example, a company may use both demographic and geographic differentiation in its marketing strategy. The key is understanding each target segment’s needs and wants and creating a marketing mix that best meets those needs and wants.
Examples of differentiated marketing strategy
Here are a few examples of businesses that use a differentiated marketing strategy:
- Procter & Gamble (P&G): P&G is a multinational consumer goods corporation with a wide portfolio of products. P&G’s brands, including Tide, Crest, Pampers, and Gillette, are designed and marketed to appeal to different consumer segments. For example, Pampers targets parents of young children, while Gillette targets men with its shaving products. Gillette Marketing Strategy of product innovation
- Toyota: Toyota uses a differentiated marketing strategy to target different market segments with different car models. For example, the Toyota Prius appeals to environmentally conscious consumers, the Sienna targets families needing a spacious vehicle, and the Lexus brand targets luxury car buyers.
- Nike: Nike offers a wide variety of sports apparel and equipment that targets different types of athletes and sports enthusiasts. For instance, they have shoes designed specifically for runners, basketball players, soccer players, etc., each promoted and marketed differently to connect with their specific target group. Nike doesn’t sell shoes. It sells an idea with its marketing strategy!!
- Coca-Cola: Coca-Cola offers a variety of beverages targeted at different segments. Diet Coke targets consumers conscious about their calorie intake, Coca-Cola Zero Sugar for those who want the traditional Coke taste without the sugar, and the classic Coca-Cola for those who love the original formula. Coca-Cola Marketing Strategy, Plan & Mix (4Ps)
- Apple: Apple has a range of products that appeal to different market segments. For instance, the MacBook Pro targets professionals who need powerful performance, the MacBook Air is geared toward students and casual users looking for portability and affordability, and the iMac is for users seeking a high-end desktop experience. Marketing & Advertising Strategy of Apple: A critical lens
These examples illustrate how different companies use a differentiated marketing strategy to target different market segments with products and promotions tailored to the specific needs and want of each segment.
