Differentiated marketing
Differentiated marketing is a strategy where a company targets multiple market segments with different offerings. This approach involves tailoring marketing efforts and products to meet the specific needs and preferences of each segment. By recognizing and addressing the diverse requirements of various customer groups, companies can potentially increase their market share and customer loyalty.
8 Key excerpts on "Differentiated marketing"
eBook - ePub- David Campbell(Author)
- 2003(Publication Date)
- Routledge(Publisher)
...Different segments need not always be different in every respect – it could be that some standard products can be promoted differently to different segments because of certain similarities or common characteristics. In other cases, the product will be substantially or completely different, and marketing to each segment will necessitate a distinctive approach to each one. Concentrated marketing An extreme form of Differentiated marketing is concentrated marketing, where an organization's effort is focused on a single market segment. In return for giving up substantial parts of the market, an effort is made to specialize in just one niche, and so we may see this referred to as ‘niche marketing’. This approach offers the advantage that the organization can gain a detailed and in-depth knowledge of its segment which, in turn, can enable an ever-improving match between the product and the customer requirement. The disadvantage relates to the extent to which the company may become dependent upon the one segment it serves. Any negative change in the demand pattern of the segment will leave the supplier vulnerable because of the narrowness of its market portfolio (see later in this chapter). A company operating with a large product range in many markets will typically use a multi-focus strategy – a combination of the above. Product positioning Product positioning is the way in which a product or a brand is perceived in relation to preferences of segments of the market, and in relation to competitive products. Thus, in a particular alcoholic drinks market, attributes thought to be important by customers might be alcoholic strength (weak versus strong) and taste (bitter versus sweet). There may be groups of customers with preferences for any combinations of these attributes, and a range of competing products that by means of the products themselves and their advertising and promotion are seen to occupy a particular position...
- John Lidstone, Janice MacLennan(Authors)
- 2017(Publication Date)
- Routledge(Publisher)
...Only very large companies can undertake a ‘full market’ coverage strategy. Examples: Coca-Cola (beverage market), Ford (transport market). Large companies can cover a whole market in two ways: UnDifferentiated marketing, the company ignores market segment differences and pursues the whole market. Example: the early strategy of Coca-Cola – one drink, in one size bottle, in one taste. UnDifferentiated marketing is defended on grounds of cost economies. Differentiated marketing, here the company operates in most market segments but designs different programmes for each segment. Ford offers a different vehicle for different purposes (domestic and commercial) and personalities. Differentiated marketing typically creates more sales than unDifferentiated marketing, but the costs are higher: ● production costs; ● administration costs; ● advertising and promotion costs; ● research costs, etc. Differentiated marketing can be used by minor players in the market to gain a foothold in a particular niche, i.e. by identifying an opportunity not directly concentrated on by the market leader (e.g. Losec, Tie Rack, Eco washing-up liquid). Selecting a strategy To decide on your product strategy, you need to answer four questions: Which segment? With what intent? With what message? Which target audience? Which Segment? To define a market segment as being attractive and worthwhile to exploit, four conditions must be met: Measurability: You must be able to measure the size of the segment so that you can monitor its size and your product’s performance against that of your competitors. Accessibility: You must be able to focus company marketing resources on the chosen segment; for example, if the sales force or other promotional means cannot reach the decision-makers in that segment, the segment is not accessible. Substantiality: The segment must be large and profitable enough to be worth exploiting...
eBook - ePubCommercial Due Diligence
The Key to Understanding Value in an Acquisition
- Peter Howson(Author)
- 2016(Publication Date)
- Routledge(Publisher)
...Products and services should therefore be analysed in terms of the way they are perceived by customers in relation to: why they buy one product rather than another; and competitive offerings. These define the appropriate segmentation. There are four approaches any company can take to marketing a product or service. These are set out in Figure 3.1 Figure 3.1 Levels of marketing segmentation Recognizing which companies are following which approach is a good first step in defining market boundaries, but more on that in a moment. Differentiation and segmentation are two totally different things … Differentiation involves: concentration on one or more key criteria which are valued by customers; adding costs selectively in the areas perceived to be important to acquirers and charging a premium price in excess the costs added. The success of this strategy lies in finding opportunities for differentiation that cannot be matched by competitors while being clear about the costs involved and the amount of the price premium that can be charged. Differentiation means working out the product, service, and image characteristics that influence customer choice and positioning your production to appeal to a selection of them. Differentiation is not the same as segmentation, but differentiation is closely linked to choices over the segments in which a firm competes. Unique offerings may mean that a firm ends up targeting only certain market niches. The term ‘segmentation’ appears to have been first coined by Wendel Smith 1 in the 1950s. He came at it from the perspective of a single product company that could either aim to secure a ‘share of a broad and generalized market’ through product differentiation or aim for ‘depth of market position in the segments that are effectively defined and penetrated’ through market segmentation. Philip Kotler 2 added a third, mass marketing...
eBook - ePubConsumer Profiles (RLE Consumer Behaviour)
An introduction to psychographics
- Barrie Gunter, Adrian Furnham(Authors)
- 2014(Publication Date)
- Routledge(Publisher)
...Traditionally their thinking has passed through three distinct stages: Mass marketing: In mass marketing, the seller mass produces, mass distributes and mass promotes one product to all buyers. Product Differentiated marketing : The seller produces two or more products that exhibit different features, styles, quality, sizes and so on. Target marketing: The seller distinguishes among many market segments, selects one or more of these segments and develops products and marketing mixes tailored to each segment. The philosophy of targeting products and services at specific target groups has gained increasing influence during the post-1945 period. As people have become wealthier and as traditional values have changed, tastes and needs have widened and the structure and requirements in many markets have become more and more differentiated. New products have therefore had to be developed which appeal to particular markets or market segments. It is the function of market research to identify those segments which permit the development of products and services with clear identities but which are, nevertheless, large enough to permit economical production and adequate returns to scale. Rising real incomes and the move away from traditional class-determined patterns of behaviour will further increase the significance of market segmentation. As we will see in this book, this development will entail the application of more sophisticated techniques of consumer classification based on psychological dimensions, as well as the more effective use and deployment of traditional geographical and demographic criteria to market segmentation. Having said that, there are still instances where direction of marketing effort to the total market for a category of products is justified. For instance, the market may be so small that directing marketing effort to the total market may be the only profitable strategy...
eBook - ePub- Paul Reynolds, Geoff Lancaste(Authors)
- 2013(Publication Date)
- Routledge(Publisher)
...product, price, promotional and channels appeals) aimed or targeted at specific market segments. Marketing writers liken this targeting versus mass marketing approach to using a rifle approach as opposed to using a shotgun approach. This idea of how companies target their marketing efforts was put forward by D. F. Abell (1980) when he suggested targeting strategies based upon customer group concentrations, or customer need concentrations, or a combination of each. Table 5.1 illustrates how the idea works in practice. Table 5.2 shows a marketing strategy of complete coverage. This is termed unDifferentiated marketing, and an appropriate example here might be a popular brand of washing powder/liquid. Table 5.3 shows a strategy that concentrates on a specialist want or wants that cover different customer groups. This is a Differentiated marketing strategy. An example here would be an adhesives manufacturer who supplies the engineering, textiles, schools, office supplies and ‘do-it-yourself’ markets. Table 5.1 Customer wants/groups Customer wants Customer groups Group 1 Group 2 Group 3 Want 1 Want 2 Want 3 Table 5.2 Complete coverage Customer wants Customer groups Group 1 Group 2 Group 3 Want 1 X X X Want 2 X X X Want 3 X X X Table 5.3 Want satisfaction specialisation Customer wants Customer groups Group 1 Group 2 Group 3 Want 1 Want 2 X X X Want 3 Table 5.4 Customer group specialisation Customer wants Customer groups Group 1 Group 2 Group 3 Want 1 X Want 2 X Want 3 X Table 5.4 shows a strategy that concentrates on supplying a variety of wants to. a specific customer group, for example, a mining machinery manufacturer supplying the coal industry. This is also a Differentiated marketing strategy. Table 5.5 shows a strategy of specialist supply where the company serves customer groups 2 and 3 with wants 1 and 3 respectively. An example is a spinner of carpet yarns who supplies carpet manufacturers, but who also manufactures and sells needle punch carpets to the motor trade...
eBook - ePub- Shiv Mathur, Alfred Kenyon(Authors)
- 2012(Publication Date)
- Routledge(Publisher)
...Differentiation Creates Private, Not Public Markets DOI: 10.4324/9780080503349-4 Introduction This chapter begins our exploration of competitive strategy. It briefly introduces the key concept of differentiation, and then explores where competition takes place. The convention is to say in an ‘industry’ or ‘market’. In other words, competition is taken to occur within either an industry or a market. Alternatively an industry is itself taken to be a kind of market. These two terms are explored in some depth. One conclusion is that the concept of the ‘industry’ is none too helpful in thinking about the competitive process. The other conclusion is that competition does take place in markets, but that in a world of differentiated offerings the boundaries of those markets are rather different from the conventional view of them. This has important practical implications. Differentiation: The Key Concept Chapter 3 defined competitive strategy as the positioning of a single offering in relation to a unique set of potential customers and competitors. Whose point of view determines how an offering is positioned? The answer to this must be the customers’ point of view. The objective of a competitive strategy is to win the preferences of its target customers. It follows that the customers’ views determine how the offering is in fact positioned, how it compares with competing substitutes. I may think my café is preferable to yours in the next street, but if the customers prefer yours, they prove me wrong. Customers see two competing offerings, A and B, as being either indistinguishable – price apart – or different in some degree. This is the critical feature of positioning an offering, and brings us to the concept of differentiation of its offering by a seller. Differentiation is the central concept of competitive strategy. It is complex, and will need to be explored in three stages...
eBook - ePubEssentials of Pricing Analytics
Tools and Implementation with Excel
- Erik Haugom(Author)
- 2020(Publication Date)
- Routledge(Publisher)
...Chapter 3 Segmentation and price differentiation When firms face finite customer responses from price changes, they have market power. This means that they can set prices more freely compared with firms operating in markets recognized by perfect competition. The question the managers of such firms must ask is how they can use their market power to maximize profit. One important answer to this question is that they should look for ways of charging different prices for, more or less, the same product or service offered to the market. That is, firms should look for ways to price differentiate based on certain criteria. Identifying the certain criteria that can be used to price differentiate is often referred to as segmentation. Price differentiation and segmentation are at the heart of pricing analytics in general, and variable pricing specifically. This chapter is devoted to explaining the theory and practice of these concepts and why firms (always) and customers (sometimes) should both be eager to have more of it. The following topics will be covered: • Definitions and degrees of price differentiation. • The economics theory behind price differentiation. • Ways to segment and price differentiate in practice. • Challenges of segmentation and price differentiation. The calculations of optimal differentiated prices and the implementation of this practice in Excel will be presented in later chapters. In this chapter we limit the Excel implementation to simple examples that illustrate the impact from various approaches to price differentiation on profit. 3.1 Price differentiation defined Price differentiation can be defined as: “The practice of charging different prices for identical or similar goods or services based on certain criteria.” 1 A given firm can perform price differentiation if it: 1. Can identify at least some variation in the maximum price its customers are willing to pay for the product or service of interest...
eBook - ePubMarketing Higher and Further Education
An Educator's Guide to Promoting Courses, Departments and Institutions
- Gibbs, Paul, Knapp, Michael(Authors)
- 2012(Publication Date)
- Routledge(Publisher)
...4 Market Segmentation, ‘Taking a Position’ and Seeking Differentiation Segmentation Customers – students, academics and other stakeholders – have different needs and only some of these can be satisfied by any one institution. Customization is increasingly breaking down markets into groups with smaller, more specific needs. (However, while this fragmentation of the mass market may well be true in Europe and the US, in other parts of the world – including Russia, China and India – education still has a mass market to aim for with all the substantial benefits this can create.) Segmented markets have three main characteristics: enhanced value, which can lead to higher profit; a better match with customer needs; the ability to exclude those segments that do not match the student/ programme values. They can be identified or created through: benefit segmentation – for example, the availability of low prices or short courses, job relatedness, relevance to recreational interests, immediate recognition for use in the market; demographic segmentation – for example, socio-economic grouping, ethnic origin (this is most often favoured by government for it reinforces their notion of centrally controlled social justice); lifestyle segmentation – for example, continuing professional development for students or lifelong learners. Many segments can be revealed by observing the attributes of certain student groups. Institutions can target one segment or many segments to develop the most appropriate proposition. In the UK, for instance, the notion that learners, particularly mature learners and those from the lower socioeconomic groups, see education as a means to an end and not just an end in itself, has an enormous effect on the type and form of programmes that institutions have to offer. More than that, it makes students behave as traditional customers for a service. They want extra value and today most of that value is in the external worth of the accredited award(s)...
