What is differentiated marketing, and why does it matter?
Differentiated marketing could be the way to go if you want to niche down (focus on your ideal buyers) or target a new segment of customers.
While it’s often more expensive than mass advertising, using customer segmentation to break down your audience can help you target your buyers more effectively.
By narrowing down what appeals to one specific group, their interests, and their concerns, you can develop products and services tailored to their needs. Then, everyone wins: You get a core audience of buyers who are more likely to be interested in your product, and your prospects get products/services that suit their lifestyles.
Read on to find out what differentiated marketing is, how to use it in your marketing strategy, and discover examples from top brands.
What Is Differentiated Marketing, And Why Is It Useful?
Differentiated marketing is a type of marketing strategy that involves creating various marketing plans for different segments of customers. This approach enables you to better target each group with messages and offers that are more relevant to them.
Differentiated marketing can be useful because it allows businesses to focus their resources on the segments that are most likely to convert, resulting in more efficient use of the marketing budget and a higher ROI.
Additionally, by tailoring messages to specific segments, businesses can create a more personal connection with their customers, improving customer satisfaction and loyalty while building their customer base.
You can implement customer segmentation in a variety of ways, including:
There are several key features of differentiated marketing:
- Segmentation: businesses must first identify distinct customer segments that they can target.
- Targeting: once you identify segments, businesses must develop customized messages and offers for each. This ensures that the right customers receive the right message. You must also find the proper channels. For example, you might use various email marketing segmentation strategies to reach different groups.
- Personalization: differentiated marketing also involves personalizing the customer experience as much as possible. This means going beyond simply tailoring messages and offers; it involves creating a truly unique experience that meets the specific needs of each customer segment.
Differentiated vs. Undifferentiated Marketing
Differentiated marketing is a strategy that focuses on creating exceptional customer experiences. It’s about developing a deep understanding of your customers and their needs and then creating products and services that meet those demands in a way no one else can.
In contrast, undifferentiated marketing takes a one-size-fits-all approach. It’s about mass-producing products and services and then selling them to as many people as possible. The goal is to reach as many people as possible with your message, regardless of whether or not it resonates with them.
The image below illustrates these differences well.
How Differentiated Marketing Can Support Your Marketing Strategy
Differentiated marketing approaches can inform your marketing strategy by helping you reach your target audience more effectively.
For example, imagine you are a company selling both men’s and women’s clothing. You could use differentiated marketing to target your female customers with ads that focus on the emotional aspects of your clothing, such as how it makes them feel more confident and beautiful. Meanwhile, you could target your male customers with ads focusing on the practical aspects of your clothing, such as its durability and stylishness.
Of course, if your customer segment information showed that you were better off flipping the subject matter for those two groups, that works too. Differentiated marketing is about meeting your customers where they are, based on hard data, not assumptions.
You could also consider differentiated marketing if you want to:
- Improve margins
- Find new niches/audiences
- Increase targeting for more effective marketing
- Regain/gain a competitive edge
However, when developing a differentiated marketing strategy, you first need to identify the target market(s). Once the target market(s) is/are identified, you can develop messages and offerings that you’ll tailor. With your messaging decided, you can start reaching customers through various channels, including advertising, public relations, and direct marketing.
That’s exactly what the engineering firm Woodward and Curran did. The company provides a wide range of services, resulting in the need for different marketing strategies for each type of clientele to target the right customers.
Woodward and Curran took time to complete brand perception surveys to understand buyer behavior and their specific pain points. This allowed the company to address and overcome consumer objections and roll out marketing plans and content on the best channels to reach its audiences.
For example, it targeted Fortune 100 companies with personalized, multi-channel marketing and got in front of wider, geography-based audiences using LinkedIn content distribution.
Is Differentiated Marketing A Good Fit For Your Audience?
Before you decide if differentiated marketing is right for your business, you need to understand your audience and what they’re looking for. Differentiated marketing is not a one-size-fits-all solution, so you’ll need to carefully consider if it’s the right approach for your company.
Here are some things to keep in mind as you decide if differentiated marketing is a good fit for your audience:
- Who is your target market? If you need to refine your niche, create customer profiles, avatars, or journeys, so you clearly understand your target audience.
- What needs does your target market have that you can address with your products or services?
- Can you reach your customers without a differentiated marketing strategy? Your products may have a mass market appeal and therefore be best suited for undifferentiated marketing in the way Coca-Cola does. Rather than segmenting, the drinks company takes the blanket approach to reach a larger audience with the same simple, positive messaging.
- How’s your budget looking? Differentiated marketing is expensive, although it may get better results than a broader campaign.
Best Practices For Differentiated Marketing
There are a few key things to keep in mind when developing a differentiated marketing strategy. Let’s look at some of them below:
Know your customer segments. It’s important to have a good understanding of the different characteristics of your various customer segments. What motivates them? What do they care about? What are their pain points? Answering these questions will help you develop targeted messages and offers that resonate with each group.
You can also divide your customers by geographics, demographics, psychographics (how people live their lives), and behavior types.
Segment your offers: Creating different offers for each segment allows you to speak directly to the needs and wants of that particular group. It makes them feel like you understand them, and when they feel understood, they’re more likely to do business with you. If you’re struggling to identify segment trends, analysis tools, such as Google analytics segmentation, can help you better understand your demographics.
Look at your customer perception: How do customers perceive your brand, and how does it compare with your competitors? Use surveys to understand what your customers think of you and analyze the data. Does this give you ideas that could help you stand out and get noticed by prospects? For instance, if your customers feel your products are higher-priced but offer a superior result, could you target a higher income bracket?
Keep your messaging consistent across channels: Even though you’re targeting different audiences, it’s important to maintain a consistent brand voice across all your marketing channels to build brand recognition and trust with your customers.
Use keywords: Find keywords using a tool like Ubersuggest and add them to hashtags and content to attract organic traffic.
Consider what emotions you want to evoke: Businesses can forge a stronger connection with their target market and increase loyalty and conversions by creating a campaign that resonates on an emotional level.
Target your customer where they are: Think about the demographics of your target market, your budget, and the message you want to communicate. By taking the time to figure out which channels will work best for your business, you can ensure that your marketing efforts are more likely to be successful.
Differentiated Marketing Examples In Action
An excellent example of differentiated marketing in action is when Apple creates a new iPhone model. They market the phone to a specific group of people willing to pay for the newest, most updated version of the product and charge a premium for it.
Apple also stays ahead of its competitors by:
- Limiting its product offers.
- Prioritizing profits instead of market share.
- Creating anticipation with keynote speeches.
As Market Realist explains, Apple is selective about where it sells its products. Its channels include:
- Direct to consumer
- Third-party cellular network carriers
- Retailers and wholesalers
- Value-added resellers
Another differentiated marketing example is Lululemon. They target yoga enthusiasts and people looking for high-quality, fashionable workout gear, and despite this being a highly competitive niche, they still stand out from competitors. How?
Let’s use its 2020 marketing strategy as an example.
Founder Chip Wilson used demographic and market research data to identify a fresh customer segment: people who enjoy a healthy life, love to travel, and suffer from work-related stress. These customers are also striving for a better work-life balance.
Lululemon also found that women who practiced yoga wanted well-fitting, easy-to-wear clothing.
This newly identified segment helped lift Lulelemon’s brand value by 40 percent, putting it at the top of the fastest-growing brands for that year.
Finally, let’s look at a company that most of us are familiar with: Nike. The sportswear company understands that different sports are particular to specific regions. For instance, in the United States, Nike markets products for basketball and football.
As you can see in the example below, Nike launched a campaign to mark the return of the NBA and featured top athletes:
In Europe; the most prominent sport is soccer. In this ‘Never Settle, Never done’ commercial, Nike promotes the Women’s 2020 Euros:
Differentiated marketing is all about tailoring your message to fit the needs of your audience, while undifferentiated marketing takes a more general approach. Businesses using differentiated marketing can achieve better results by targeting specific customer groups with targeted campaigns.
The main advantage of differentiated marketing is that it allows companies to better match their products or services to the specific needs of different groups of customers. This can lead to increased sales and higher levels of customer satisfaction.
Differentiated marketing can also create a more unique and differentiated brand image for a company which can help to build brand loyalty and increase market share.
Lululemon, Nike, and Apple are just some of the companies using a differentiated marketing strategy. With that said, just about any major company with clearly defined customer segments can benefit from using it. Some products with a huge market share and mass appeal, like Coca-Cola, eschew differentiated marketing for a simple, general positive message.
Differentiated marketing is an essential tool for businesses to target their audience better. By segmenting your market and tailoring a unique marketing mix to each segment, you can more effectively reach your target consumers and persuade them to purchase your product or service.
Differentiated marketing suits a wide variety of industries and is a key component of successful marketing campaigns, as Nike, Lululemon, and Apple illustrate.
Although differentiated marketing campaigns may be more expensive, they might also deliver better results by getting you in front of a more targeted audience.
Do you use differentiated marketing in your advertising?