Before launching a marketing campaign or promoting your business, you need to decide who to target first. This involves understanding your product offering and who those features would benefit most and then segmenting your target audience into groups based on one or more shared characteristics.
Once you’ve segmented your audience, the next step is targeting, which involves selecting a segment or segments to communicate your message and product offering to in hopes of converting. There are three different target market strategies you can implement – Differentiated, Concentrated, and Undifferentiated.
Knowing which one of these strategies your business wants to implement is a solid first step in building an effective, long-term marketing strategy.
Before we dive into examples, let’s take a look at what we mean when we say ‘differentiated marketing.’
What is differentiated marketing?
Differentiated marketing occurs when a company creates campaigns meant to appeal to two or more different target audiences, demographics, or marketing segments. By targeting multiple well-defined customer profiles, a brand can build its customer base, master their niche, and begin to grow organically to build their brand awareness.
Let’s say you run a local coffee shop. You’ve been in business for six months, and things are going great. You’ve identified your ideal customer as 25-35 years old, lower to middle-class income, and are young professionals. Now that you are generating steady revenue, you feel it’s time to expand your reach into new market segments to help fill the slower times between the morning rush and rush hour.
You decide to run $1.99 special for the following month and segment your campaign by budget-conscious and quality-focused prospects. You promote your special to college students as a quick and affordable alternative to Starbucks. And create a short video about where your beans and ingredients are sourced from, for older higher-income prospects.
Both advertisements are vastly different but are part of the same $1.99 campaign (and justly can pave the ground for a great small business referral program.
Types of differentiated marketing
Marketing can be summed up as putting the right product, in the right place, for the right price, at the right time. This process is also known as the Marketing Mix and is a useful tool to help understand what your product is really offering. The marketing mix is based on the 4 Ps:
Product – is what you’re marketing and is either a physical item or an intangible service. In order to have an effective marketing strategy, all of your product’s benefits and features need to be easy to understand.
Price – covers the actual cost the end-user is supposed to pay for your product. Of course, how you price your product will directly affect how you sell your product.
Place or Placement – is how your product will be provided to your customer. Distribution plays a vital role, and a solid placement strategy can help you identify what channels work best for your product. Keep in mind how a user access your product needs to complement the rest of your product strategy.
Promotion – covers the communication aspect of your marketing strategy. These may include PR, sales promotions, special offers, and advertising. Anything that may draw a prospect in to learn more about your product falls under the promotion heading.
Examples of differentiated marketing
Let’s review a few businesses that have used this strategy well.
Lilly Pulitzer is a luxury beachwear company founded over 60 years ago in Palm Beach, Florida. Back in 2015, they teamed up with Target and launch a more affordable line of accessories, clothing, cosmetics, and home goods. The results were enough to crash Target’s site the day they launched.
By offering a more affordable line of products for a limited time and at more locations, Lilly Pulitzer was able to drive demand, and acquire new loyal customers at a lower cost per lead than ever before.
Bumble does a great job of differentiating its product by tailoring its services around its users’ needs. Known as the dating app where females make the first move. Bumble realized that their app was more about creating connections than just dating, and rolled out their BFF mode back in 2016. Where people new to an area or just looking to expand their network could connect with like-minded individuals near them. Shortly after, they launched Bumble Bizz, allowing entrepreneurs and freelancers to connect using their friendly UI.
By offering different modes and value offers, Bumble was able to increase its user retention long after a user might have jumped out of the dating pool.
Benefits of differentiated marketing strategy
The goal of differentiated marketing is to segment your audience to deliver a more personalized message and tailored experience to your ideal user. By creating unique campaigns for each segment, your offer is more likely to resonate with a given audience member’s needs.
By breaking up your target audience into groups, you’re able to run multiple campaigns at once. So, it reaches a large amount of the people you want as your customers, rather than people who don’t stand to benefit from your offer. (no wasted space on irrelevant eyes)
First impressions are everything, creating tailored content makes it easier for people to connect with your brand, become loyal, and eventually share with their friends.
Disadvantages of differentiated marketing
More segments mean more ad groups and more ad spend. Making multiple, tailored campaigns usually has a higher price tag. After all, you have to create unique messaging and resources for each segment, and the human resources alone can add up fast.
Moving in a slightly new direction, here’s a quick introduction on concentrated marketing.
What is concentrated marketing?
Concentrated marketing occurs when a company creates ONE marketing message for a specific, narrow demographic. This marketing strategy typically works best for startups and is a natural step for any business looking to find their ideal prospect or niche.
If we go back to our coffee shop example, our business was open for six months before launching our differentiated marketing strategy. By identifying our ideal target audience as 25-35 years old, lower to middle-class income, and are young professionals. We were able to tailor our brand voice and campaigns to connect with this very narrow demographic and build a loyal customer base. Providing us with the resources necessary to segment our audience and test our differentiated marketing strategy to grow our customer base.
Example of concentrated marketing
Let’s review an example of a business that has used concentrated marketing.
Justice is a tween girl’s apparel company that has over 800 storefronts in the US and Canada. Justice founded their success by focusing on a particular target audience – girls ages 6-12. Over the past ten years, they have stayed true to their brand and focused on a very concentrated marketing strategy.
In 2016, they launched Live Justice. Which is a mobile app that has everything a tween girl would want, games, quizzes, wish lists, and a ton of free content. Instead of targeting parents to build brand loyalty with reward programs. They designed Live Justice to be a community where young girls can share and discover how to make the world a better place — thus turning their target audience into positive brand ambassadors for mom and dad.
Benefits of concentrated marketing strategy
Concentrated marketing is great for identifying and building your ideal audience. By only focusing on meeting the needs of a very narrow user base, you can settle into a niche, and find look-alike users who are more likely to refer their friends.
Concentrated marketing is the most cost-effective marketing strategy for small businesses. It makes it easier to naturally grow your audience and build authority in your niche/industry. And will often lead to more differentiated marketing strategies, when the time comes to optimize your funnel.
Disadvantages of concentrated marketing
The only downside to concentrated marketing is that it will only resonate with the small segment you’re targeting. Startups can often find themselves in a tricky situation when the time comes to expand their brand, often getting used to their particular value proposition and brand voice.
Let’s cover the last marketing strategy now, here’s what undifferentiated marketing means.
What is undifferentiated marketing?
Undifferentiated marketing occurs when a company creates one campaign for its entire, broad audience—all segments of the audience see one message. Usually, the message is more general since it’s meant to appeal to such a wide range of people.
Going back to our coffee shop example, one last time. Let’s say it’s 2 years after launching our differentiated marketing strategy to attract a wider audience of college students and higher-income individuals.
We solidified our spot in the market as the local go-to coffee spot and rarely rely on advertising besides special events. If we would like to increase traffic to our entire user base we might run an undifferentiated marketing strategy, that unifies our brand voice. For example, we might run a general campaign year-round, with the hook “High quality. Low price.”
Examples of undifferentiated marketing
Undifferentiated marketing is very common on tv ads, radio ads, print news ads, car ads, and billboards. At its core, undifferentiated marketing strategies have no concern for a target audience when it comes to fulfilling any specific needs and is often used to promote products that almost everyone could use.
An excellent example of this would be Allstate. Their message is short and sweet. “With Allstate, you’re in good hands.” There’s no need to segment their audience after all everyone needs insurance. Allstate’s primary concern is maximizing reach and market share.
Benefits of undifferentiated marketing strategy
A significant advantage of undifferentiated marketing is that it is more cost-effective IF your product naturally appeals to a broad audience. They also require less maintenance and don’t need to be changed as often, if ever, because they appeal universal.
By successfully launching an undifferentiated marketing strategy, your business will create a solid “sense of brand” and greater reach.
Disadvantages of undifferentiated marketing
The obvious problem with using more traditional media channels is the initial cost. Running TV or print ads aren’t cheap and often will require a rather large investment for any startup upfront.
Understanding the differences of these can better allow you to design a strategy that works best for your business. Weigh all the options, and remember that you might find combining a variety of marketing strategies together can be the most beneficial for you.