Differentiated or Concentrated Marketing?

Target market strategy

When designing their marketing strategy, organizations have three main choices in regards to their approach to target marketing. The first choice is to ignore the concept of market segments and the differences in consumer needs. With this approach (which is sometimes referred to undifferentiated marketing or mass marketing), the firm will provide a generic (or middle-of-the-road) offering to the marketplace, with the hope that it appeal to some consumers.

The second choice is to focus on one target market only (which is sometimes referred to as concentrated marketing). And the third choice is to adopt a strategy of targeting multiple target markets, each with different marketing mix (which is referred to as differentiated marketing, as the firm differentiates between segments).

Definitions of undifferentiated, concentrated and differentiated target marketing

These three terms all refer to how the firm has approached its target market selection. When using undifferentiated target marketing, the firm has decided not to align its market offering to the needs of any segment in particular. Whereas the other two approaches, both recognize the importance of building a market offering around the needs of a defined target market.

As suggested by its name, firms adopting undifferentiated marketing do not differentiate between the different needs in the marketplace, and it can be defined as:

  • The offering of a marketing mix that is designed for the general needs of an overall market, without regard for the needs of the different segments in that market.


Concentrated marketing can be defined as:

  • Concentrating the firm’s market offering solely on the needs of one defined target market.


With differentiated marketing, the firm has multiple market offerings that take into account the differentiation of needs in the marketplace.  It can be defined as:

  • The targeting of two or more market segments, with separate and distinct market offerings, which have been designed to closely meet the needs of those particular segments.


Advantages of each approach

There are legitimate reasons for adopting each of the three broad target market strategy approaches. There is not one approach that is better than the others. The selection would depend upon the organization and its market. As a starting point, the following table outlines the advantages of each approach.

Undifferentiated marketing

Concentrated marketing

Differentiated marketing

Quite suitable for generic markets (where the product is a commodity)

Typically adopted by small firms just starting out (as they have limited resources and expertise)

Ideal for companies wishing to grow

Can be very useful when there is little diversity of core needs between the defined market segments

May be necessary approach for firms with a limited set of capabilities and skills

A necessary approach for large companies wishing to protect their market share

This is a possible approach for large global companies that have strong offerings, (such as Apple with their iPad, which could be considered an example of modern day mass-marketing)

Also used by niche marketers whose competitive advantage is their reputation and expertise within a well-defined, and usually quite small, market segment

A good approach from firms who have assets/capabilities that can be leveraged into other target markets

Typically a good /approach for small or emerging sub markets, where the development of multiple marketing mixes would not be viable

This may be a sensible approach if the organization is has had financial difficulties and needs to conserve resources

A necessary approach where there is a diversity of consumer needs across market segments


What is the difference between differentiated marketing and concentrated marketing?

Concentrated marketing is sometimes a stepping-stone to differentiated marketing.

Differentiated marketing strategy is where the firm selects two or more target markets, we have a unique marketing mix offering in place for each target market.

The word differentiated refers to the company choosing to offer different products and other elements of its marketing mix to its different target markets.

Clearly, differentiated marketing strategy is a more complex business to run and will generally have a higher cost structure, but it does have the advantages of greater market potential and growth, as well as diversity of income streams.

Concentrated marketing, as opposed to differentiated marketing strategy, has the efficiency of production, logistics, and supply/purchasing.

This is because the firm is running a more consistent product mix using a more consistent channel of manufacturers/wholesalers/retailers. As opposed to a differentiated marketer, who needs to run a less consistent marketing mix, and will incur costs and inefficiencies as a result.

For example, a law firm may choose to be a specialist in providing family law advice and focus upon a target market of consumers with concerns regarding their marriage and specialize in prenuptial agreements and divorce settlements.

In this case the firm has both specialized and adopted a concentrated marketing approach.

However, the firm could expand their product offering to this same target market and also offer advice on setting up family trusts, drafting new wills, help with investments, help with buying/selling joint property, providing financial advice for people starting over, and so on.

In the second example, the law firm has a much broader product range – still targeting the same set of consumers – but thinking about what other related needs with they have at this time.

Concentrated marketing is the most focused target market strategy a firm can adopt. Over time the firm may be able to build strengths and capabilities that will make it easier for them to expand into other target markets, pursuing a differentiated marketing strategy for their target markets.

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