Differentiated marketing: definition, examples, pros and cons

Differentiated marketing is a targeting strategy in which a company chooses two or more market segments and gives each one its own marketing: a tailored message, and often a tailored product, price or channel. The aim is to reach more of the market than one campaign could, while still speaking to each group in terms it cares about.

What is differentiated marketing?

Most companies sell to more than one kind of customer. A software product might be bought by small agencies and by large enterprises. A hotel group serves business travellers, families and luxury guests. One message rarely fits them all.

With differentiated marketing you:

1. split the market into segments with different needs
2. pick the segments you want to serve
3. create a separate message, and where needed a separate offer, for each one

It starts with knowing your segments. Our guides to market segmentation, psychographic segmentation and behavioral segmentation explain how to find them.

How does it compare with other targeting strategies?

Differentiated marketing is one of four common ways to target a market.

Read more about niche marketing and one-to-one marketing.

What is the difference between positioning and differentiation?

The two ideas work together but are not the same.

Positioning

Positioning is how customers perceive your product or brand compared with alternatives. It is the place you want to hold in their minds, such as "the easiest CRM for small sales teams". The idea was popularised by the advertising executives Al Ries and Jack Trout.

Differentiation

Differentiation is what actually makes your product different from competitors: features, service, price, quality or experience. It is one of the main tools you use to earn a position. When buyers compare two similar products, differentiation gives them the reason to choose one.

Where differentiated marketing fits

Differentiated marketing is about targeting, not about your product's unique features. When you serve several segments, you usually need a slightly different positioning for each one, built on the differences that matter to that group.

What are the advantages of differentiated marketing?

• Wider reach. Serving several segments puts you in front of more potential buyers than a single-segment strategy.
• Better relevance. Each group hears a message about its own needs, which tends to land better than a one-size-fits-all campaign.
• More revenue opportunities. Different offers for different segments let you capture value that one product and one price would miss.
• Learning. Running campaigns for several groups shows you which segments respond, how they see your brand and whom they compare you with.
• Less risk. If one segment slows down, others can carry the business.

What are the disadvantages of differentiated marketing?

• Higher cost. Every extra message means extra creative work, media spend and often extra product, sales or support effort.
• More complexity. Teams must manage several campaigns, offers and sometimes brands at once.
• Uneven results. One segment may respond well while another does not respond at all.
• Brand dilution. If the messages pull in very different directions, people may lose track of what the company stands for.

Examples of differentiated marketing

Marriott's brand tiers

Marriott International owns dozens of hotel and timeshare brands, grouped into tiers. Luxury brands include The Ritz-Carlton, St. Regis and JW Marriott. Premium brands include Marriott Hotels, Westin and Sheraton. Select brands include Courtyard, Fairfield and Aloft. Longer-stay brands include Residence Inn and Element. Each tier is aimed at a different kind of stay and budget, so each brand can be marketed to its own type of guest.

A B2B software company (hypothetical)

Imagine a project management tool that serves two segments:

• Small agencies see self-serve plans, a free trial, short videos about saving time on client work and ads on social media.
• Enterprises see security and compliance content, case studies from large customers, a sales-led demo and account-based campaigns aimed at named companies.

Same product, two segments, two clearly different marketing approaches. That is differentiated marketing in a B2B setting.

How do you build a differentiated marketing strategy?

1. Segment your market by firmographics, needs, behaviour or buying process. See how to determine your target market.
2. Choose segments you can serve profitably. Check size, growth, reachability and how well your product fits.
3. Write a value proposition per segment based on what that group cares about most.
4. Adapt the mix of product, price, channels and promotion for each segment. Our article on the marketing mix can help.
5. Measure each segment separately, then put more budget behind the segments that respond and reconsider the ones that do not.

Differentiated marketing works best when the segments are clearly different and each is large enough to justify its own effort. If you are a small team with one strong segment, start with niche marketing and add segments as you grow.