Since the Arduino analog inputs are only 10-bit, a raw value change of two jumps almost an entire degree (°C).
If you know that the temperature stays within a certain range, you can use a voltage divider on th AREF pin to increase the sensitivity of the analogRead().
e.g. if for 5V the range of the tmp36 stays between 300 (~1.6V) and 600(~3.2V), one could supply 3.3V to AREF
the measurements range would become ~450 - 900 effectively increasing the # bits per degree.