Targeting strategies should be appropriate to fulfill marketing objectives of the business. The three broad targeting strategies that businesses usually employ are Mass Marketing, Niche Marketing and Differentiated Marketing.
What is Differentiated Marketing targeting strategy?
Differentiated Marketing targeting strategy is trying to sell different products to different market segments. Another name for Differentiated Marketing is selective marketing or multi-segment marketing.
This purposefully-used marketing strategy focuses on both the products and the customers to give different people exactly what they need and want. Each market segment will have its own Marketing Mix created which could include new products.
Differentiated Marketing targets various market segments trying to provide different goods and services to different markets at differentiated prices. First, marketing managers need to conduct market research to find out what specific groups of customers exist within it. Then, the firm will research and develop appropriate products for each group.
A business employing Differentiated Marketing targeting strategy sells goods and provides services after careful examination of the whole market. It must have strong production capabilities and flexibility to effectively produce several versions of a product.
In Differentiated Marketing, the firm assumes that people have different tastes and preferences and they all do not wish to be the exact same product.
Examples of Differentiated Marketing strategy
Example 1: Electronics manufacturer Apple produces smartphone and computers in various configurations. iPhone 14 has been manufactured with many different features and in many different technical configurations such as iPhone 14 Pro, iPhone14 Pro Max, iPhone 14, iPhone 14 Plus and iPhone SE.
Example 2: The Coca-Cola Company uses this strategy to target various market segments for Coke. Coca-Cola not only makes the regular classic Cola, but also produces and sells Diet Coke for weight-conscious consumers, and flavored drinks such as Vanilla Coke or Lemon Coke for consumers with certain tastes.
Example 3: Toothpaste producers usually offer many different versions of a toothpaste such as whitening toothpaste, toothpaste for children, sensitive teeth toothpaste, toothpaste with medical characteristics, tartar toothpaste or herbal toothpaste.
Advantages of Differentiated Marketing
1. Better chance of satisfying customer needs and wants than Mass Marketing. With increased consumer choice nowadays and more competitors operating in the markets, the business will be able to offer a much wider range of product versions of to appeal to different segments of the mass market.
2. Marketing campaigns will be more successful than for Mass Marketing. Mass Marketing campaigns can be very expensive yet inefficient as they are very broad targeting millions of customers. As a result of this lack of focus, Mass Marketing will be wasteful as specific customers are not being directly targeted. In Differentiated Marketing, marketing campaigns are much more purposeful and targeted for each market segment.
3. Better chance of satisfying customer needs and wants than Mass Marketing. With increased consumer choice nowadays and more competitors operating in the markets, the business will be able to offer a much wider range of product versions of to appeal to different segments of the mass market.
4. Reduces risks. Market segmentation gives businesses the opportunity to produce products that meet the needs of different groups of consumers. Hence, Differentiated Marketing minimizes the risk that products will not meet customer expectations.
Disadvantages of Differentiated Marketing
1. More expensive than Niche Marketing. Preparing multiple Marketing Mixes for multiple market segments. Several versions of a product need to be prepared, each with various pricing and promotional strategies used. This requires a considerable time and resources from the Marketing Department.
2. Economies of scale not fully exploited. While market sizes will be larger than in Niche Marketing, they will not be as enormous like in terms of Mass Marketing. This will not allow to entirely minimize the average cost of production. Hence, the full economies of scale are unlikely to be achieved. This means that unit costs are higher than they would be if the product was sold to a mass market.
3. Customer confusion resulting from brand dilution. When the business enters into new markets or makes too many products that it usually does not sell, it will stretch the brand out too thin. As the result of this excessive brand extension, the current customers will become uncertain what the company’s core business is any longer. This will cause the brand to lose value due to lack of focus not aligning with the company’s original mission.
Marketing strategies are necessary for the firm to achieve marketing objectives. Marketing managers will be looking at appropriate market segmentation, targeting and positioning of the firm and its products.
