Differentiated marketing involves targeting multiple niche markets with specific products. It can be costly for smaller companies, but profitable if done correctly. Companies must define each market, choose the right product, and develop a market strategy for each niche. However, it can also lead to financial trouble if not executed properly.
Differentiated marketing is a strategy used by companies to cover different markets with various products. The most common strategy is to find a niche across multiple markets or demographics and fill it with matching products. In some cases, the product itself may contain the building blocks with changes made for each segment. Differentiation can be costly, especially for smaller companies that have fewer resources than larger organizations. Filling niche markets, however, can be a highly profitable business strategy.
Companies often spend a lot of money defining the different markets and demographics within an overall economy. Differentiated marketing relies on a company finding multiple niche markets, many of which can be small and difficult to define at times. Once a business has figured out the niche market, information about the type of product that will fill the niche is the next step. In some cases, the product choice can be quite obvious, while in other niches, consumer research is required to define the best product for the niche. Costs can be different for each niche market and its related product.
Other issues may also arise under a differentiated marketing strategy. Industry profiles may be needed to determine the current market stage of the industry. For example, dying industries that have a niche market may not be profitable for an extended period. High competition can also form part of the industry analysis. While a niche exists, the level of competition can be such that a large, flexible company can quickly change operations to eliminate new competition, even in a niche market.
Market strategy is also part of differentiated marketing, just as strategies are part of any commercial operation. The distribution of goods in each market niche is an important component of the market strategy. Retail locations for selling merchandise, product pricing, and advertising packages can also include the entire differentiated marketing strategy. Again, each niche may require a different approach to achieve high sales and profits. For example, an upscale industry and niche market will likely require a different approach to selling merchandise.
Companies that engage in differentiated market strategy techniques on a large scale can quickly find themselves in financial trouble. Offering specialized products to multiple markets is often expensive. Product failures or inappropriate pricing schemes can result in a quick loss of profits and a precarious financial foundation. Companies must be able to initiate differentiated marketing strategies slowly and work across multiple markets, ensuring success in each market in turn.
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