Product Differentiation
What Is Product Differentiation?
Product differentiation is a marketing strategy designed to recognize a company's products or services from the competition. Fruitful product differentiation includes recognizing and communicating the unique characteristics of a product or company while highlighting the distinct differences between that product or company and its rivals. Product differentiation remains forever inseparable with fostering a strong value proposition so a product or service is alluring to a target market or crowd.
On the off chance that effective, product differentiation can make a competitive advantage for the product's seller and at last build brand awareness. Instances of separated products could incorporate the fastest high-speed Internet service or the most gas-proficient electric vehicle on the market.
How Product Differentiation Works
Product differentiation is fundamentally a marketing strategy to urge the consumer to pick one brand or product over one more in a crowded field of contenders. It distinguishes the characteristics that set one product separated from [other comparable products](/equality product) and utilizations those differences to drive consumer decision.
Differentiation marketing can likewise include zeroing in on a niche market. For instance, a small company could find it trying to contend with a lot bigger rival in a similar industry. Subsequently, the smaller company could highlight uncommon service or an unconditional promise.
Advancing Product Differentiation
The references to a product's separating characteristics are reflected in the product's bundling and promotion and, frequently, even in its name. The cat food brand name Fancy Feast suggests a high-quality cat food that cats love, and the advertising builds up that claim. The FreshPet cat food brand highlights its utilization of natural fixings. Slope's Science Diet passes on the message that the cat food was developed by animal sustenance specialists.
A product differentiation strategy might require adding new functional highlights or may be essentially as simple as redesigning bundling. Some of the time, differentiation marketing requires no changes to the product except for another advertising campaign or other promotions.
Measuring Product Differentiation
As stated before, the differences between the products can be physical in nature or quantifiable, like the lowest-price exercise center in a region. In any case, the differences between the products could be more abstract, for instance, a vehicle company that claims their cars are the most rich on the market. Retailers and designers frequently spend a lot of advertising dollars showing their garments on youthful, hip models to underline that their dress is on-trend. In fact, no company can measure or evaluate the level of style their product offers.
Subsequently, product differentiation is frequently subjective since it's pointed toward adjusting customers' evaluation of the benefits of one thing compared to another. The advertising trademark, "Gets out the hardest stains" suggests that a certain cleanser brand is more effective than others, however the genuine difference in the product compared with contending products may be microscopic or nonexistent.
Nonfunctional Attributes Matter Too
At the point when the functional parts of two products are indistinguishable, as in filtered water, non-functional highlights can be a differentiator — the bundling or container design, for instance.
Types of Product Differentiation
Preferably, a product differentiation strategy ought to show the way that the product can do everything the contending decisions can yet with an extra benefit that is exclusive to that product. Below are a couple of the most common strategies employed to separate a product or service.
Price
Price can be utilized to separate a product in two ways. Companies can charge the lowest price compared to contenders to draw in cost-cognizant buyers — the retailer Costco is a model. Notwithstanding, companies can likewise charge high prices to infer quality and that a product is a luxury or high-end thing, for example, a Bugatti sports vehicle.
Performance and Reliability
Products can be separated in light of their dependability and toughness. A few batteries, for instance, are rumored to have a more drawn out life than different batteries, and consumers will buy them in light of this factor.
Location and Service
Nearby businesses can separate themselves from their bigger national rivals by underlining that they support the neighborhood community. A neighborhood restaurant, for instance, will hire locally and may source its food and fixings from nearby farmers and purveyors.
Vertical Product Differentiation versus Horizontal Product Differentiation
There are two severe forms of product differentiation: horizontal and vertical. At times, notwithstanding, a consumer's decision in a purchase might be a mix of the two.
Vertical Differentiation
An illustration of vertical differentiation is when customers rank products in view of a quantifiable factor, like price or quality, and afterward pick the most highly ranked thing.
Albeit the measurements are objective, every customer decides to measure an alternate factor. For instance, a restaurant could top one customer's rundown on the grounds that their dinners are lower in calories. Another customer could pick an alternate restaurant on the grounds that the dinners are less expensive, and price is the main factor for them.
Horizontal Differentiation
An illustration of horizontal differentiation is when customers pick between products in light of personal preference as opposed to an objective measurement.
For instance, whether somebody picks a vanilla, chocolate, or strawberry milkshake boils down to personal taste. If the majority of the products on the market cost about something very similar and have a large number of similar highlights or characteristics, the purchase decision depends on subjective preference.
Mixed Differentiation
More complex purchases will generally think about a mix of vertical and horizontal differentiation. While buying a vehicle, for instance, a consumer might think about safety metrics and gas mileage, the two of which are objective measures and instances of vertical integration. Be that as it may, the consumer may likewise consider what colors the vehicle is accessible in or the brand picture. Every consumer will place an alternate weight of significance on every one of the criteria.
Benefits of Product Differentiation
A separated product can increase brand loyalty and even endure a higher price point. On the off chance that a product is perceived to be better somehow or another than its rivals, consumers will think of it as worth the higher price.
Differentiation marketing can assist companies with standing apart when a product isn't perceived to be entirely different from a contender's, like filtered water. The strategy may be to zero in on a lower price point or that it's a privately owned business. At the point when functional parts of the two products are indistinguishable, nonfunctional elements can be highlighted. The strategy can be an appealing change in design or styling.
An effective product differentiation campaign raises consumer interest and gives the consumer motivation to accept they need one product instead of another.
Instances of Product Differentiation
Companies introducing another product frequently refer to its cost advantages. If Company X creates a coffee maker practically indistinguishable from that of Company Y, Company X might offer a variant at a lower cost. In the event that it accompanies a reusable filter, the savings on paper filters are highlighted in bundling and advertising.
For instance, product differentiation is clearly on display among the numerous coffee maker brands on the present market. KitchenAid coffee makers have a weighty, substantial feel and a premium price to match. Keurig separates itself no sweat of purpose of coffee units. Amazon Basics, as usual, sets a fantastically low price point.
Product Differentiation FAQs
What is an illustration of product differentiation?
An illustration of product differentiation is the point at which a company stresses a characteristic of another product to market that sets it separated from others currently on the market. For instance, Tesla separates itself from other auto brands in light of the fact that their cars are creative, high-end, and battery-worked. Likewise, their customer service is advantageous and fast.
What are the components of product differentiation?
Any part of a product can separate it in the psyche of a consumer. All thusly, a producer or manufacturer ought to think about opportunities for differentiation in its production areas: marketing, product management, engineering, sales, customer support. For instance, how might the product be marketed so it stands apart from its rivals? How could the product be designed in a unique manner? How might a brand give prevalent customer support?
What are the 3 types of product differentiation?
The three types of product differentiation are vertical, horizontal, and mixed. A common illustration of vertical integration is when two products are comparable yet priced in an unexpected way. In any case, assuming the price of the two products was something very similar, one would be thought of "the best" on account of its perceived quality. For instance, a Hanes T-shirt versus a Gucci T-shirt.
Horizontal differentiation happens no matter what a product's quality or price point. The customer picks a product or brand as indicated by personal preference, for instance, Coca-Cola or Pepsi.
Mixed differentiation is complex and includes factors of both vertical and horizontal differentiation. For instance, a consumer might pick another vehicle from a similar class of vehicle and consider the price points of the various brands (vertical differentiation) yet in addition the shades of the inside (horizontal differentiation).
For what reason is product differentiation important?
Product differentiation is important on the grounds that it allows various brands or companies to gain a competitive advantage in the market. Assuming that differentiation were unattainable, the greater companies with economies of scale would constantly rule the market since they can undermine smaller producers in terms of price. Product differentiation is likewise a method for controlling costs for the consumer by keeping a competitive market.
What is Apple's differentiation strategy?
Apple separates its products by pricing them higher than its rivals suggesting that the products are better quality and integrate the most recent technology. The company additionally animates consumer interest by introducing publicity before product dispatches through cunning marketing and distribution strategies.
The Bottom Line
Product differentiation is a way for products and brands to command market share in light of consumer preferences. Customers pick products in light of multiple factors whether it be price, brand picture, quality or toughness, taste, variety, or an impermanent trend. On the off chance that a product can separate itself from its rivals in a unique manner and appeal to consumers, it will enjoy a competitive benefit and gain market share. In this way, product differentiation is likewise a way for market powers to take care of their responsibilities and keep prices down for the consumer.
Highlights
- Companies gain a competitive advantage and market share through product differentiation.
- Product differentiation increases market competition and controls prices for consumers.
- The components of differentiation incorporate product design, marketing, bundling, and pricing.
- A product differentiation strategy ought to exhibit that a product has every one of the highlights of contending decisions yet with extra exclusive benefits no other person offers.
- Product differentiation relies upon consumers' regard for at least one key benefits of a product or brand that go with it a better decision than comparable products or brands.
