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What Is Differentiated Marketing?

By Osmand Vitez
Updated May 16, 2024
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Differentiated marketing is a strategy companies use to blanket different markets with multiple products. The most common strategy is to find a niche in several markets or demographic segments and fill the niche with corresponding products. In some cases, the product itself may contain the basic components with alterations made for each segment. Differentiating may be expensive, especially for smaller companies that have fewer resources than large organizations. Filling market niches, however, can be a highly lucrative business strategy.

Companies often spend copious dollars defining the different markets and demographic segments in an overall economy. Differentiated marketing depends on a company finding multiple market niches, many of which may be small and difficult to define at times. Once a company discovers the market niche, information on the type of product that will fill the niche is the next step. In some cases, the product choice may be quite obvious, while in other niches, consumer research is necessary to define the best product for the niche. Costs may be different for each market niche and its related product.

Other issues may also present themselves under a differentiated marketing strategy. Industry profiles may be necessary to determine the current stage of the industry’s market. For example, dying industries that have a market niche may not be profitable for an extended time period. High competition can also be a part of industry analysis. Even though a niche exists, the level of competition may be such that a large, flexible company can quickly alter operations in order to snuff out new competition, even in a niche market.

Market strategy is also a part of differentiated marketing, much like strategies are a part of any business operation. The distribution of goods into each market niche is one major component of market strategy. Retail locations for selling goods, product prices, and advertising packages can also comprise the entire differentiated marketing strategy. Again, each niche may require a different approach for accomplishing high sales and profits. For example, an upscale industry and market niche will most likely require a different approach to sell goods.

Companies that engage in large-scale differentiated market strategy techniques can quickly find themselves in dire financial straits. Offering specialized products to multiple markets is often expensive. Product flops or inappropriate price schemes can result in a swift loss of profits and precarious financial footing. Companies must be able to start differentiated marketing strategies slowly and work their way into multiple markets, ensuring success for each market at a time.

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Discussion Comments
By Charred — On Jan 23, 2012

@everetra - Yes, but they’re a tough market, too. Those Gen Y kids tend to be quite fickle. In my opinion I wouldn’t invest heavily in that demographic.

I would target retiring baby boomers, who represent a very large market segment too. Obviously this group isn’t interested in skateboards or MP3 music.

But there are a lot of products and services that would appeal to them. A lot of advertisers are already targeting this market because they see the trend continuing.

By everetra — On Jan 22, 2012

@Mammmood - Everyone talks about Generation Y these days. In my opinion, this is the toughest crowd to market to. The reason is that Generation Y does not respond to traditional media campaigns, at least not the way you normally think.

They’re connected to social networking and they watch YouTube. They like fun activities. They are very optimistic about the future and they believe anything is possible. You have to tap these instincts in order to market to them.

You may even have to choose unconventional marketing paths as well, so the traditional marketing campaigns may not work. In other words, you may have to use social networking or YouTube or find some other way of making yourself “cool” to get the attention of this crowd. It’s worth it, in my opinion. It’s a billion dollar market from what I can tell.

By Mammmood — On Jan 22, 2012

@David09 - It’s amazing that some companies can sell to up upscale shoppers. I am a price/value shopper myself. I am always looking for the lowest price on quality goods.

However, some consumers are willing to pay a pretty penny for high value merchandise. Some of these people are what marketers like to call “conspicuous consumers,” where they may make their purchases obvious for the world to see.

Think Rolex watches as one example. I’ve never understood how someone could pay so much for a watch. I realize that for many, however, such purchases are meant to be investments, and so I can see some benefit there.

By David09 — On Jan 21, 2012

Differentiated marketing makes sense to me, especially in advertising, where people have basically been overwhelmed with too many sales messages in my opinion. People in niche markets are better targets to sell too.

For example, you could sell your products strictly to college students, as part of a marketing strategy. Tailor everything you sell to the college crowd so that they’ll be drawn to buying from you as opposed to the competitor.

However, this strategy will work for only so long. Eventually you want to branch out to the mass market to broaden your appeal. But it helps as kind of a kick off campaign for your business, especially if you are in a college town where that niche demographic already exists in abundance.

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