Product differentiation is the method of making the products preferentially unique from the product in crowd.
Product differentiation could be a specific reasonably business and selling strategy. It focuses on a target market within which competitors already supply similar product or services. An organization that uses product completely differentiation tries to form the perception among bound target customers that the company’s version of this product or service is a few how different and so has added worth that's not on the market from competitors.
Product differentiation is extraordinarily vital to running any reasonably business. This is often owing to economic principles that are demonstrated time and time once more in nearly each market place. If the general public perceives no distinction between 2 competing product, then the sole doable suggests that of competition is thru pricing.
Product differentiation is sometimes achieved in one amongst 3 ways:
- Physical Variations
- Perceived Variations
- Support Services
Physical Differences: Physical variations arise when the merchandise of 1 firm is physically totally different from the merchandise of alternative corporations. These variations will exist thanks to materials used, chemical composition, shape, size, taste, or color.
Perceived Differences: Product differentiation may result from variations perceived by patrons, even supposing no physical variations exist. Such perceived variations are typically accomplished through advertising, particularly by establishing whole names. Whole names, in fact, are a standard thanks to produce the perception of variations among merchandise, even though none physically exist.
Support Services: product that are physically identical and looked as if it would be identical may also be differentiated by support services. This can be quite common in retail trade. One store offers "service with a smile," whereas another provides convenient parking, and a 3rd incorporates a 90-day a reimbursement guarantee. Even supposing the product are identical, variations exist within the "overall package" of product and support services.