Differentiated marketing strategy
From CEOpedia | Management online
| Differentiated marketing strategy |
|---|
| See also |
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.
- 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.
References
- Boonghee Y., Naveen D., Sungho L. (2000). An Examination of Selected Marketing Mix Elements and Brand Equity, "Journal of the Academy of Marketing Science", vol. 28
- Kim J. H., Hyun Y. J. (2011). A model to investigate the influence of marketing-mix efforts and corporate image on brand equity in the IT software sector, "Industrial Marketing Management", vol. 40, p. 424-438
- Prasad A. N., Kalyan R., Russell S. W. (2005). Planning Marketing-Mix Strategies in the Presence of Interaction Effects, "Marketing Science", vol. 24, no. 1
- Ravald A. (1996). The value concept and relationship marketing, " European Journal of Marketing ", vol. 30
- Tsatsoula E. (2018). Application of Ansoff's Matrix-Methodology: Marketing Growth Strategies For Products, "Master Of Science in Strategic Product Design"
- Wind Y., Robertson T. S. (1983). Marketing Strategy: New Directions for Theory and Research , "Journal of Marketing", vol. 47, no. 2, p. 12-25
Footnotes
Author: Justyna Chłopek
