What Is Differentiated Marketing? Why Can It Be Your Competitive Advantage?

What does your business need to succeed? Yes, having a groundbreaking idea is important. Recruiting the best talent is also essential. Knowing unique ways to advertise your brand is also a necessity today. But are we missing out on something? Yes, you must determine your target market. This is where every company needs to make a choice. Will they go with differentiated marketing? Will they opt for undifferentiated marketing?

Every company understands who they want to sell to. When you set up your business, you target a specific type of customer. You expect to make sales in a particular market segment.

Some companies choose to go with one marketing campaign. All segments of their audience get the same message. Their marketing efforts are not as diverse. They craft a marketing campaign that reaches various segments of their consumer base.

In this article, we will talk about differentiated marketing. What does it mean? What are the benefits of a differentiated marketing strategy? We will also talk about the most prominent brands that prefer differentiated marketing.

Many growing companies also go for differentiated marketing. Can such a marketing approach help your business grow? Let’s find out!

What Is Differentiated Marketing?

Differentiated marketing is when a company creates products and marketing campaigns for specific market segments. Some top brands take this approach. They cater to customers being specific and differentiated to each one. They fulfill their needs with differentiation in quality, outstanding services, innovation, or product-specific features.

There are various benefits of differentiated marketing. It helps companies expand their reach by investing smarter in a niche and increase revenue.

We will talk about the benefits of differentiated marketing in another section. For now, let’s understand the difference between the types of marketing approaches.

What’s the Difference Between Differentiated Marketing and Concentrated Marketing?

Concentrated marketing is when the company targets one specific market audience with a specific offer that usually doesn’t appeal to other audiences. For example, when you target hydrants to the elderly, you will focus on market campaigns for this specific niche, and someone younger won’t be willing to buy it.

A differentiated marketing strategy is when a company targets more than one market segment but in a laser-focused strategy. Let’s say the same company that launches a new line of soaps for babies. It may have a different brand, but targeting this specific segment. Differentiated marketing usually is related to a differentiated or superior offer of a product or service.

Both types of strategies try to do the best for a segment. Still, differentiated marketing targets more than one niche, focusing on each segment as the concentrated market.

What’s the Difference Between Differentiated Marketing and Undifferentiated Marketing?

Differentiated marketing targets multiple specific segments with multiple differentiated product features and marketing campaigns focused on those segments. On the other hand, undifferentiated marketing targets multiple segments with one or fewer products and with the same marketing campaign. It’s also known as mass marketing.

Examples of Differentiated Marketing

Tea Shop

A tea spot is famous for its herbal tea. All tea enthusiasts from the city gather there every morning. But some of their potential customers say that they don’t go there because it sells only teas, and they usually want to eat something having a tea. The owners of the tea spot come up with an idea.

They study the market and realize tea lovers wouldn’t oppose having certain types of food there either. They also notice that their product would come along well with healthy food.

The owners start researching the healthy food market and realize people were not satisfied with the healthy food taste. For the majority, healthy food was tasteless.

They decide to develop and start selling a few variations of healthy food, but with a differentiated and superior taste. They don’t sell a great variety of food because they can focus on quality and taste.

After adding food to their menu attracts fitness people besides tea lovers, as the two segments are not exclusionary.

They become specialists in healthy food besides tea. Their product has high quality and higher prices as they can “wow” customers with the variety of teas and the taste of their healthy food. They attend both segments uniquely.

This way, the owners can market to two different segments of their target audience. This is an example of differentiated marketing in terms of product and targeted audience.

The Smartphone

A smartphone company is famous for its camera specifications. But now, they are willing to expand their customer reach. They come up with a new gaming phone.

With a high refresh rate and a smooth processor, they launch this new product to this specific gaming audience. They can now market to mobile gamers as well as photographers. It will also increase their brand value.

This was an example of differentiated marketing in terms of product.

Looking at these two examples, one can see the benefits of differentiated marketing. Such a marketing strategy can rejuvenate a company.

It can help a company gain a competitive advantage in other markets as it already knows how to attend to a niche need.

Now, let us discuss the benefits of differentiated marketing in closer detail.

Why Choose Differentiated Marketing?

Companies are always trying to reach out to new customers. They try all sorts of new marketing strategies to succeed. And differentiated marketing is one of them.

There is a reason why so many brands opt for such a marketing approach. There are a bunch of benefits that come with a differentiated marketing strategy.

Let’s talk about some of these benefits in brief before we move on to the benefits.

Expanding Customer Reach With Focus

Some companies sell to customers from every age group. As a result, their marketing campaigns are diverse. When running a marketing campaign, they will have to invest more to reach the mass market.

How can your company achieve efficiently the same customer reach? A differentiated marketing strategy can be the answer. It allows you to expand your brand’s reach to an audience that has specific needs. Your business reaches people it did not reach before.

Let’s say you are in the hospitality business. Your hotel is the go-to spot for couples. But after some time, your loyal clientele started having children, and you want to keep offering the best service for them. You then expand your hotel to have rooms for “families with children”. You also introduce a new playing area for children.

Now, your company will target your promotional videos to two different niches. One will show a couple, and the other will show kids playing there. You create a specific feature that attends a niche you were not present before. You make your product attractive and unique for this second audience, and families with children will also consider your hotel an option. This is a perfect example of differentiated marketing.

Increased Sales Revenue

This is the most obvious benefit on the list.

When your company is willing to market to a unique range of customers, one can expect to be a specialist in this market and sales to increase. After you do to your first audience, you can go to the next one. After all, your customer base is no longer everyone but someone you deeply understand.

Lower Costs

It’s more efficient to grow sales to a niche for marketing campaigns and products. And differentiated marketing lets you do that. It’s also cheaper to make a brand in a niche than in a mass market.

After that, if you feel you’re stronger, you can then target more audiences or larger audiences.

It Helps Businesses Gain Competitive Advantage

Staying ahead of the competition is vital for any business. When you focus on your niche consumers’ problems and needs, you are more adept at innovating. Market research and competitor analysis come in handy for that.

When you target one market segment, you are stronger to fulfill a range of specific consumer needs. You will invest your market research budget and time in one specific niche to understand exactly what they are looking for.

Does your prime competitor market many segments? Then you can opt for a differentiated marketing strategy and offer a better product or service to one of their audience since you will focus better.

You Diversify Your Risk

Diversifying risks is vital for your company. The changes within your industry can catch you off guard. Even the best of business models might not seem viable any longer. That is when targeting more than one market segment can be an advantage.

A differentiated marketing strategy allows you to be the best in these segments. You can maintain revenue with segment “A “ if segment “B” has collapsed. After all, your company fulfills the specific needs of two types of customers.

Again, it gives you an advantage over your competitors. As a business owner, you feel a sense of security about your company’s future.

Crafting A Killer Differentiated Marketing Strategy

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Opting for a differentiated marketing strategy is not enough. You must be able to craft and execute the strategy well. But for that to happen, you need to prepare accordingly.

So, what do we mean by preparation in this case? Is it the same old market and audience research? No, crafting a good differentiated marketing strategy is more than conducting market research. It is about making the right marketing choices all the way through.

First, you need to put yourself in your customer’s shoes. In differentiated marketing, you try to appeal to two or more market segments. As a result, you have to design a complete marketing campaign.

Each of the market segments should have something to look forward to. They should have landing pages, web pages, and videos dedicated to them. Doing this will give a fine balance to your marketing campaign. Such a dynamic marketing campaign attracts a wide range of customers.

A few things should be common when communicating with various marketing segments. You should be authentic in your interaction with the customers. Remember, your brand must portray its own identity. The content you put out there should also be relevant. It should provide solutions and be interactive.

Last but not least, what you put out there should have practical value. When catering to a diverse set of customers, companies can get carried away. They end up making claims that they fail to back up with actions. You must avoid such a situation at all costs.

Today’s consumers will not buy any exaggerated claims. So, make sure that you are actionable in your communication. Opt for a well-balanced differentiated marketing strategy that you can deliver upon.

Time To Reach New Shores

The business world has seen a lot of change. Companies can reach international clientele with ease. And so, international borders and oceans can no longer stop you from gaining more customers.

It also makes it a wonderful time to change your marketing approach. If your company can fulfill a range of needs, success isn’t far away.

But if you choose to go with differentiated marketing, make sure you do it right. As we discussed, preparation is the most important thing. It would be best if you stepped into your customer’s shoes. After all, marketing to different segments needs a dynamic approach. Make sure you have something for all the market segments you are targeting.

So, are you planning to target a wide range of market segments? Start by clearly defining those segments. You can then move on to crafting a stellar differentiated marketing campaign.

Remember, a simple change in your marketing approach can spell massive growth.

Christian T.

Christian has over ten years of experience in marketing agencies.​ ​Currently, he has been dedicating his time to a tech startup and also writing for major publications. He loves podcasts and reading to keep up with the latest trends in marketing.