Two-tier marketing addresses two segments of the marketplace at one time. Many small businesses operate within a niche market, but also attempt to broaden their reach with more general campaigns. By targeted the primary and secondary markets in this manner they exhibit two-tier marketing methods.
The purpose of two-tier marketing is to broaden the appeal of your products outside what may seem to be their natural market segment. This allows you to address the primary market that you've been targeting since the beginning, while expanding into new segments that may open up all manner of new opportunities to the company. Two-tier marketing is developed either as your company looks for new sources of revenue to maintain market position, or as a method of expanding a successful model in new ways. In either case, the strategy requires you to depart from your current approach and take a chance.
If you own a small luxury goods retail store you likely target consumers at the upper end of the income range. This is a market that makes sense for you since they have the combination of disposable income and a desire for luxury items. This market segment is limited however and becomes even more so in times of economic struggle. By introducing a limited line of less expensive items, you can also target the mid-range consumer who may have less to spend but who vastly outnumbers the more lucrative high end consumer. Making more profit on fewer luxury sales and less profit on a greater number of mid-range sales is a great combination for any business.
Brands that cater to the professional segment of a given industry are often locked into their experts-only marketing model. Their marketing message, packaging and initiatives are all aimed at the pro and there is no concern for the general public. The limits of the segment or the desire to expand further may again drive a small business to enter into a two-tier strategy. The general public makes up a much larger and thus far untapped segment that can increase sales and revenue exponentially if approached properly and with the right product line. The leap into this second tier requires the creation of products that appeal to the layman, and the marketing to advertise them.
The issues that two tier marketing causes are a conflicted message, a decrease in brand prestige, a loss of pro status and a reduction of dedicated marketing funds. When your brand is focused on luxury, your clientele may not view it with such high regard once lower cost and lower quality items are brought into the fold to reach a larger audience. The same goes for professionals who may see your foray into the amateur realm as a sign that their business is not your highest priority any longer. Splitting your marketing funds to cover the expense of marketing to two segments when you're used to chasing only one can affect the amount and quality of marketing you are able to produce and distribute.