A differentiated marketing strategy is an approach to target marketing where a company markets to multiple market segments using distinct market mixes for each one. This is one of three common approaches to target marketing strategies and is common when a company believes it has unique benefits that would appeal to different markets.

Understanding differentiated marketing strategy requires you to understand a few key marketing terms: target marketing strategies and your marketing mix. Study these terms and real life examples of how they operate in the business world to strengthen your understanding of how you can make a differentiated marketing strategy work for your company.

Three Unique Target Marketing Strategies

The three most common target marketing strategies are differentiated, undifferentiated and concentrated, according to Western Publishers Ltd. While a differentiated marketing strategy means you target each segment uniquely, an undifferentiated strategy means you target multiple market segments with a generally consistent approach.

For example, an undifferentiated marketing strategy for tennis balls targets both dog owners and professionals by focusing on the health benefits of exercising with the tennis balls. Dog owners use the balls to play fetch with their dogs and professionals might play tennis after work, but they both reap the same benefit from using the tennis balls: exercise. A differentiated marketing strategy would focus on the balls' durability when targeting dog owners, emphasizing how the balls will last years being carried in dogs' mouths and thrown for them to retrieve, while the strategy for marketing the tennis balls to professionals might instead be a focus on how tennis is a great hobby that can connect them with others in their industries.

A concentrated strategy means that you concentrate your production and marketing efforts on meeting the needs of one market segment, or a very small number of them. Using our tennis ball example, a concentrated marketing strategy would be one that solely markets the tennis balls to little league coaches by emphasizing their value in hand-eye coordination drills.

Developing Your Marketing Mix

The marketing mix, commonly known as the 4 Ps of marketing, is a blend of four core elements that go into your marketing efforts. They are:

  • product
  • place
  • price
  • promotion

Product is what you are marketing, place or distribution is the availability of the offering, price is the cost, and promotion involves the specific forms of marketing used.

In a differentiated strategy, the make-up of your marketing mix is inherently different for each market segment. You could market a different product, use different promotional tools or have different price points. For example, tennis ball ads targeted as professionals might be primarily social media ads, whereas ads meant to be seen by little league coaches might be better packaged as posters in sporting good stores and near playgrounds.

Understanding Differentiated Marketing Examples

In its overview of target marketing options, LearnMarketing.net shares the example of an airline targeting economy, business and coach class flyers with different marketing programs and price points. Many subscription-based service providers target different market segments by using tiered pricing and benefits programs. For instance, low-cost streaming service seekers may get a more basic or minimal service package, whereas higher-end quality seekers would get a better resolution and more channels for a higher price.

Differentiated Marketing Benefits and Drawbacks 

The main benefit of using a differentiated marketing strategy is the ability to leverage your various product strengths as they best align with each market segment. The major disadvantage of differentiated marketing is that it costs more to produce different products or market with different messages for each segment. Western Publishers points out that larger companies are more equipped to use differentiation because they are more likely to get enough volume in each market to justify the costs. Smaller companies, on the other hand, typically do not have the budget to successfully utilize differentiated marketing strategies and instead must rely on undifferentiated strategies.