The Disadvantages of Differentiated Marketing

Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. 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. Differentiated marketing has pros and cons relative to a low-cost or mass market approach.

Designing specific product offerings and then customizing marketing to each customer group is an expensive endeavor. Creating multiple versions or variations of products takes significant research, design and development time and costs much more than creating a single product. After doing so, you have to invest heavily in marketing to present distinctive messages that sell each product to the appropriate target customers.

A huge challenge with differentiated marketing is developing a consistent theme and reputation for your brand. Branding is based on instilling positive, specific associations with your brand over time. Differentiated marketing could lead to such fragmented messages that you never convey a clear brand image. Apple, which differentiates with its mobile technology and digital music devices, has overcome these challenges by emphasizing cutting-edge technology and innovative leadership as a unifying background theme for all of its products.

Companies that use differentiated marketing typically emphasize product quality and service as key value propositions. They aren't often the low-cost option in their industries, which means they compete against companies that can offer lower price points. In fact, some struggle with copycat products or knock-offs that undercut the market. Because of this, they have to be diligent in product design and marketing to sell value and quality to discerning customers.

By using differentiated marketing, you run the risk of actually cannibalizing your own products. 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. In essence, if you get too fine in your targeting, you create multiple products to satisfy the marketplace when fewer products would do the trick. This contributes to cost disadvantages.