Evaluate Competitors Methodically. Advantages: There are many radio and television stations out there. Will consumers find value in the unique features your product provides? Most businesses find the need to identify niche markets with customers that are most likely to buy their products. 2. He holds a Master of Business Administration from Iowa State University. Create Mutual Benefit. Typically creates more sales then Undifferentiated Marketing. Advantages: Separate mix can be developed for each segment, different markets can be easily identified. © 2019 www.azcentral.com. Nordmeyer holds a Bachelor of Science in accounting, a Master of Arts in international management and a Master of Business Administration in finance. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." Weigh the advantages of exploiting a specific market against the disadvantages of spreading your advertising dollars too thin. In turn, customers will choose your products if those products best meet their needs, which will increase their product satisfaction and your profits. A market consists of individual customers who have unique product wants and needs. If you design and market too many variations of a product that are similar, you may prevent customers from buying a more expensive product because they can get a "mini" version or lower cost option. Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. By differentiating customers based on specific needs, you are able to select customers you want to serve based on your company's capabilities. BusinessDictionary: Differentiated Marketing, Ohio State University: Finding Customers -- Market Segmentation, Disadvantage of a Firm That Decides to Follow a Product Specialization Strategy, The Importance of Demographics to Marketing, Price Segmentation Vs. Understanding you customers enables you to design an appropriate promotional campaign and public relations initiatives to improve sales. Therefore, small businesses frequently attempt to differentiate two or more sets of customers with unique needs which might be met with the company's products or services, from other customers within a market. This contrasts with a more universal, mass market approach, in which the same product is offered to the total audience and different benefits are emphasized to attract each customer group. Creating multiple versions or variations of products takes significant research, design and development time and costs much more than creating a single product. The Disadvantages of Differentiated Marketing. This contributes to cost disadvantages. In turn, using differentiated marketing, you can create and market products to satisfy the needs of two or more market segments. What Is a Narrow Perspective of Marketing? Examine whether you have a core message that will appeal across group boundaries. If you understand how existing and potential customers perceive your competitors and their products, you will be able to identify overlooked opportunities. Jupiterimages/Brand X Pictures/Getty Images. One concern with differentiated marketing is that you might be wrong about who your customer is. Difficulty in the pricing of goods that are not new into the market. Differentiated marketing could lead to such fragmented messages that you never convey a clear brand image. What is Differentiated Pricing? In addition, you won't be eligible for discount advertising rates if you must place your ads in a wide variety of outlets. Always explore niche markets you have ignored to see if you were wrong about their buying habits. These benefits are multiplied with a differentiated strategy by the number segments to which you market your products or services. You can use information regarding geographical, demographic and other characteristics of your customers to create products to identify very specific customer needs and wants. The advantages and disadvantages of marketing via radio or television will clearly be considerably different to those of print. In turn, you can adopt a differentiated strategy and design and market products to meet the needs of particular customer groups, which enables you to achieve a competitive advantage. Differentiated marketing to small groups of customers may have limits. Just because a target group is well-defined does not necessarily mean that is the right group to aim for. So here’re some ways or steps on how a business can do that. Understanding the needs of particular customers enables your company to design a marketing offer that appeals to those customers. Disadvantages of differentiated marketing. While differentiated marketing is effective, it has some disadvantages, and you should examine those disadvantages before you initiate a differentiated marketing program. If each ad you place is so targeted it cannot be reused, or can only be used in certain media outlets, you will incur a lot of expense in creating fresh ads for each group. Using market segmentation -- differentiation -- enables you to perform an in-depth evaluation of the characteristics of your potential customers. How Does Product Differentiation Affect Price Elasticity? Disadvantages of Product Differentiation 1. A small business usually cannot afford to market to everybody. Because of this, they have to be diligent in product design and marketing to sell value and quality to discerning customers. Billie Nordmeyer works as a consultant advising small businesses and Fortune 500 companies on performance improvement initiatives, as well as SAP software selection and implementation. By using differentiated marketing, you run the risk of actually cannibalizing your own products. How to Mix Variables of a Product in Marketing, Unique Selling Points for Marketing Products. Your business has to use unique messaging and campaigns for each segment, and the required resources can add up fast. As a result, you achieve a competitive advantage by offering products that best serve a selection of potential customers within the market. You research a market to clarify the specific needs of individual customers and utilize those needs to differentiate individual customer groups within the market from others. Also called Multi-segment Marketing or Segmented Marketing. Beyond that, you will need to either identify new target markets or find a way to appeal to the broader market. By segmenting customers based on specific needs and adopting a differentiated strategy, your company's decision-makers can better define marketing goals and allocate limited resources required to accomplish the goals. A differentiation strategy doesn't necessarily guarantee that consumers will find the value that … Revenue increases are not guaranteed. Your market's customers have a variety of needs and preferences. Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. You may have to choose between marketing to the smallest group possible or marketing to the largest group possible. If you do want to differentiate your message for different audiences, such as different age groups, find a way to put something in your advertising that is universally true about your company or product, so that even your niche markets will identify you as a business that has broad appeal. As a product remains in the market for longer consumers become smarter about the prices and thus the premium charges being charged can no longer be sustained. In fact, some struggle with copycat products or knock-offs that undercut the market. Difference Between Stereotyping & Market Segmentation, Analysis of Targeting, Segmentation & Positioning, 7 Questions to Ask Before Launching a Social Media Campaign, Difference Between Micromarketing & Macromarketing, tutor2u: Market Segmentation--Targeting Strategies, Ohio State University: Finding Customers: Market Segmentation. They aren't often the low-cost option in their industries, which means they compete against companies that can offer lower price points. You can spend a lot of advertising dollars trying to appeal to niche markets. 1. Positioning Statement Versus Value Proposition. During her career, she has published business and technology-based articles and texts. Perform In-Depth Market Evaluation. You can only grow so far with a niche market. What Are the Functions of Strategic Management? All rights reserved. If you narrow your focus too far, you may actually be missing potential customers in a group you haven't thought of.


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