Differentiated marketing strategy

From CEOpedia | Management online

Differentiated marketing strategy - a strategy aimed at implementation of specific marketing tasks by company. It concerns, among other things, the production and sale of products but also generating profit through development and achieving a good position on the market. Each company has its own specific goals and concrete plan of action, but it always seeks to the most important goal - to maximize profits. The company may encounter various problems so it is important to make a good decision and stick to assumed plan.

Strategic options of the Ansoff matrix

Harry Ansoff has developed four strategies[1]:

  • Market penetration (concept related to the increase in sales of a specific product that is already available on the market)
  • Market development (it aims to offer current products in new market sectors)
  • Product development (it based on offering new products on the already operated market)
  • Diversification (it aims to introducing a new product to the new market sector. There are two diversifications: vertical when the seller begins to produce his products or when the seller opens another sales point or horizontal when the manufacturer begins to produce a different product than the previous product)

Marketing mix

The company could not exist without a marketing strategy. Marketing is a process of planning, creating and delivering products to meet the needs of customers. Marketing mix is a very popular 4P concept (product, price, place, promotion) and its extension to additional elements (people, physical evidence, process, pleasure).

  • Product (this concept is related not only to a specific product but also to the assortment, brand [2], quality, service or packaging. It must be focused on satisfying the needs of customers. The product's life cycle is also important - its appearance on the market, development, maturity and finally drop in which may cause the recall of the product from the market, therefore its price is very important)
  • Price (this concept is related to pricing policy, payment method, discounts and rebates. Creating a price by large companies will be different than by small companies. Large companies that have been in the market for a long time will create a price that will be affected by the quality and exclusiveness of the product. However, small companies will lower the price to attract as many customers, gain a good position in the market and be a competitor to other companies).
  • Place (this concept is related to the area of the company's activities, distribution and logistics. The main goal is to reach the customer with a specific product. It is important to have a good location or a prosperous online store).
  • Promotion (a very important concept in running a company, especially for new companies. We can understand the promotion through a series of ads aimed at promoting the brand [3] or public relations which creating a good image.
  • People (producers, customers, staff)
  • Process (service, provision of services, sale)
  • Physical evidence (brand logo, building, technical equipment)
  • Pleasure (the features of the products are not only to satisfy the needs of customers but also to give them pleasure, for example, a nice room decor, pleasant smell)

There is also a concept 4C (customer value, cost, convenience, communication). The concept of 4C compared to the concept of 4P is an idea seen by the customer.

  • Customer value (value and attractiveness of the product for the customer)
  • Cost (costs covered by the customer both financial and related to the waiting time for a given product)
  • Convenience (very important concept for the customer understood through the availability of the product, the universality of information about it and polite and qualified service)
  • Communication (relevant relationships with the customer, listening to his expectations)

Examples of Differentiated marketing strategy

  • Packaging - Many companies use differentiated packaging to make their products stand out from competitors. For example, Coca-Cola has created numerous variations of their bottles and cans to draw attention to their brand.
  • Pricing - Differentiated pricing is often used to target different customer segments. For example, a company may offer discounts for bulk orders to attract businesses, while offering lower prices for individual consumers.
  • Advertising - Companies often use differentiated advertising to reach a wider audience by targeting different customer segments. For example, a company may use television commercials to reach a broad audience, while using social media and online ads to target specific demographics.
  • Distribution - Companies may also use differentiated distribution strategies to reach different customer segments. For example, a company may sell their products on their website to reach online shoppers, while also selling them through brick-and-mortar stores to reach in-person shoppers.
  • Customer Service - Companies can also use differentiated customer service strategies to meet the needs of different customer segments. For example, a company may offer personalized support for high-end customers, while also offering a self-service portal for lower-end customers.

Advantages of Differentiated marketing strategy

The main advantages of differentiated marketing strategy are:

  • It allows to tailor the product or service to the needs and preferences of different target audiences. This way, a company can reach more customers and increase sales.
  • It allows for more effective use of resources, since the same product or service is marketed differently for different groups.
  • It helps to build a stronger brand identity, as customers can find something that is specific to them.
  • It allows companies to compete more easily in the market, as they can create a competitive advantage.
  • It helps to increase customer loyalty, as customers will be more likely to stick with a company that offers them something tailored to their needs.

Limitations of Differentiated marketing strategy

Differentiated marketing strategy has certain limitations, such as:

  • Time consuming - Differentiated marketing strategy is a complex and time consuming process which usually involves a lot of research and analysis. This can be costly and time consuming, especially for smaller businesses.
  • Potential for market segmentation - Differentiated marketing strategy can be difficult to implement properly, as it requires careful segmentation of the target market and accurate targeting of the right audiences.
  • Risk of wrong implementation - Differentiated marketing strategy may be implemented incorrectly, which can lead to incorrect targeting of the wrong audiences and potentially decreased profits.
  • Unsuitable for small companies - Small companies may find it difficult to implement a differentiated marketing strategy, as they may lack the resources and resources to conduct the necessary research and analysis.
  • Increased competition - Differentiated marketing strategy can increase competition in the market, as it may put companies in a better position to compete with each other.

Other approaches related to Differentiated marketing strategy

  • Market segmentation - it is a process of dividing a market into smaller parts (segments) that can be more easily targeted. It involves analyzing customer needs, wants and demographic data, to better understand the target market.
  • Product differentiation - it is a strategy that focuses on creating a unique product offering that is perceived by customers to be different from competitor's products. It is based on identifying and exploiting opportunities that competitors do not offer.
  • Pricing strategy - it is the method of setting a price for a product or service, and may include discounts and special offers. It takes into account the cost of production and the desired profit margin, as well as the competition.
  • Promotion - it is an integral part of any marketing strategy, and involves activities such as advertising, public relations, sales promotions and direct marketing.

Differentiated marketing strategy is a powerful tool to maximize profits, increase market share and gain competitive advantage. It includes market segmentation, product differentiation, pricing strategy and promotion. All of these elements are important for creating a successful marketing strategy and should be taken into account when developing a differentiated marketing campaign.


Differentiated marketing strategy — recommended articles
Areas of marketing — Beachhead market — Concentrated marketing — In store marketing — Promotional campaign — Route to market — Marketing advantage — Cross marketing — Innovative marketing

References

Footnotes

  1. ↑ Tsatsoula E. (2018)
  2. ↑ Boonghee Y., Naveen D., Sungho L. (2000)
  3. ↑ Prasad A. N., Kalyan R., Russell S. W. (2005)

Author: Justyna Chłopek

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