Differentiated marketing is a hybrid solution between undifferentiated, or mass marketing, and concentrated marketing. While a concentrated marketing strategy addresses just one segment of the marketplace, differentiated marketing attempts to specifically address more than one segment. By contrast, undifferentiated marketing offers a generic product and marketing message to the entire market at large, without targeting any specific segment.
Concentrated marketing takes a narrow focus on only one group of potential buyers, which may be very specifically identified by parameters including age, income, gender, location, marital status or other variables. The product and marketing message are specifically addressed to that group only. Differentiated marketing also customizes a message for each of its target consumers but tries to attract at least two - and potentially multiple - groups of buyers.
By targeting its message and even its product to more than one sub-group of available buyers, a company using a differentiated marketing strategy broadens its pool of sales prospects. For instance, marketing a product to both men and women as opposed to just women roughly doubles the number of potential buyers. However, in some cases, the product fills such a specific niche that trying to sell to other segments would be a waste. This is particularly true for high-end products with strong sales margins, where fewer units sold at a higher margin will still produce profitability.
Depending on how many aspects of the marketing mix are tailored to mutliple markets, the cost of marketing may nearly double with each added segment. This is particulalry true if product customization is one of the variables differentiated between markets. By only having to create one marketing campaign, companies using concentrated marketing can save duplicate costs and develop more depth in their single market.
The smaller a company is, the more appropriate concentrated marketing is. It's relatively low cost, and the company may not have the resources to effectively serve multiple segments at once. Differentiated marketing is more appropriate for a mature company that is trying to expand into new markets or re-purpose and revive existing product lines. Mass marketing also is appropriate at times in tandem with both concentrated and differentiated marketing. For instance, the grand opening of a new business could be advertised to the general public, while a concentrated marketing message might go out to its previously identified prospects who are most likely to purchase. Finally, promotions that are tailored to several segments -- for example, one aimed at teens and one aimed at grandparents -- would be examples of differentiated marketing strategy trying to bring in several segments.
