Differentiated Marketing

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What is Differentiated Marketing? Meaning.

Differentiated Marketing is a market coverage and Market Segmentation strategy in which the product is aimed at two or more specific segments in the market. The firm decides to target several segments and develops distinct products/services with separate Marketing Mix strategies aimed at the varying groups. This technique builds greater loyalty and repeat purchasing by considering customer needs and wants. The company may be trying to sell exactly the same product to different segments but it will change its promotional methods and the image it creates.

Advantages: Separate mix can be developed for each segment, different markets can be easily identified. Typically creates more sales then Undifferentiated Marketing.

Disadvantages: High marketing costs, message may not reach some customers.

Also called Multi-segment Marketing or Segmented Marketing.

What is Differentiated Pricing? Meaning

Differentiated Pricing, also called: "Discriminatory Pricing" is a major part of a differentiated marketing strategy refering to modifications in the basic price in order to accommodate differences among customers (segments), products, locations, etc.

Price discrimination occurs when a company sells a product or service at a different price that does not reflect proportionate differences in its cost.

Degrees in Price Discrimination

• First Degree Price Discrimination: The Seller charges a different price to each individual customer based on the intensity of the customer's demand for the product. This type of pricing strategy requires to accurately determine what each customer is willing to pay for a specific product or service and selling that good or service for that exact price. It is costly, time-consuming and difficult to perfect for most businesses, but it allows the seller to capture the highest amount of available profit for each sale.
• Second Degree Price Discrimination: The Seller charges less to buyers who purchase in volumes.
• Third Degree Price Discrimination: The Seller charges different prices based on the following factors:
  • CUSTOMER-SEGMENT PRICING: Different prices are charged to different customer segments for the same product or service.
    For example, Banks offer higher interest rates for fixed deposit accounts of senior citizens.
  • PRODUCT-FORM PRICING: Different versions of a product are priced differently, but not in the proportion of their costs.
    For example, a 500-gram packet cost more then half of a 1 kg packet of some detergent.
  • BRAND IMAGE PRICING: The same or very similar products are priced at different levels based on brand image differences.
    For example, a pair of jeans made by Levis would cost more than a similar pair of jeans from an "inferior" brand.
  • CHANNEL PRICING: Products carry a different price based on the channel through which they are sold to the customer.
    For example, an alcoholic beverage purchased at a supermarket store would be cheaper as against purchasing it in a bar or in an airplane.
  • LOCATION PRICING: The same product is priced differently based on location, even though the underlying costs are the same.
    For example, the tickets for window seats in an airplane cost more than the aisle seat tickets.
  • TIME PRICING: The price is varied as per season, day of the week (Weekdays-Weekends), and time of the day.
    For example, hotel rates are usually higher during public holidays and around festive occasions such as Christmas.

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Compare with: Undifferentiated Marketing  |  Differentiation Strategy  |  Concentrated Marketing  |  Niche Marketing  |  Market Segmentation  |  Profit Pools  |  Marketing Mix  |  Extended Marketing Mix

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