Successful product differentiation involves identifying and communicating the unique qualities of a company's offerings while highlighting the distinct differences between those offerings and others on the market. The references to these qualities are reflected in the product's packaging and promotion, and often even in its name. How is the product different or unique from others in the same category? These two sodas are largely the same and can be bought for a similar price. To distinguish the product from another product by a competitor or by the same organisation. Product differentiation is the main feature of Monopolistic market. Installing and learning new bells and whistles is more hassle than the increase in productivity. For smaller, local companies that are trying to stand out from national brands, it's common to emphasize that they're a local business. A successful product differentiation campaign raises consumer interest and gives them a reason to believe they need their product versus another. 1. During a customer’s purchasing decision-making process (or buyer’s journey), the customer will evaluate available products and will make assumptions by comparing those available products. Product differentiation is process used by companies to clarify the differences between their products and other products on the market. Examples of differentiated products might include the fastest high-speed internet service or the most gas-efficient electric vehicle on the market today. It’s a case where it is possible to say that one good is better than the other. Often, this type of differentiation gets lumped in with horizontal differentiation. Product Differentiation •A business level strategy intended to: -increase the perceived value of the firm's products What is product differentiation? Product differentiation deals with making changes in the marketing mix of a product so as to differentiate it from whatever the competition is offering OR to offer a product which stands out in the market. With vertically differentiated products, the price points and marks of quality are different. Dyson; Apple iPhone, iPad & iMac It’s how you distinguish what you sell from what your competitors do, and it increases brand loyalty, sales, and growth. The same is true in most sectors, from cars to cell phones, and fashion to financial products. Think Coca-Cola and Pepsi. What is product differentiation? Product differentiation is one of the effective ways a company can set itself apart from other players in the market. If it comes with a reusable filter, the savings on paper filters are highlighted in packaging and advertising it. Product differentiation is a marketing strategy whereby businesses attempt to make their product unique to stand out from competitors. Focusing on your customers is a good start to successful product differentiation. Product differentiation is intended to prod the consumer into choosing one brand over another in a crowded field of competitors. A differentiated product can increase brand loyalty and even survive a higher price point. In actuality, no company can measure and quantify the level of coolness or style their product offers. The actual difference in the product and that of the competition might be minuscule or nonexistent. Those other products can include competitors but also a company’s own products, to prevent overlap between the offerings. However, the differences between the products could be more abstract such as a car company that advertises that their cars are the coolest on the market. Hubspot defines it as: the strategy used by businesses to highlight the unique features and benefits of its product or service to separate it from competitors. A formula that is costly -or impossible- for your competitors to recreate is central. When a company efficiently differentiates its products, and few essential products stand out, it usually brings out brand loyalty on the consumer’s part. It’s not how the brand sees its product, it is how the customer recognises the product. Here are a few product differentiation examples of businesses that have made the strategy work for them. Product differentiation is the process of distinguishing the product from that of the competitors so that consumers can be attracted. A product’s unique selling proposition (USP) can be literally anything that makes it unique or different from others out there. Retailers and designers often spend a significant amount of advertising dollars showing their clothes on young, hip models to convey the underlying message that if you don't wear their label or brand, you're not with it. It can be analysed using the Boston Matrix. Airstream Main competitors: Fleetwood, Jayco, Winnebago. Product differentiation is the process of identifying the distinctions that exist between goods and services that are intended for consumption by the same segment of the consumer market. What Is Product Differentiation? This means making the product different from its competitors. If no effort is put into a differentiation strategy, products risk blending in with a sea of competitors and never getting the market hold they need to keep going. The FreshPet brand highlights its use of natural ingredients. There are several different factors that can differentiate a product, however, there are three main categories of product differentiation. Those include horizontal differentiation, vertical differentiation, and mixed differentiation. Organizations with multiple products in their portfolio may use differentiation to separate their various products from one another and prevent cannibalization. When utilized successfully, product differentiation creates a competitive advantage as customers view your product as superior. What is product differentiation? Create beautiful roadmaps in minutes. Product Differentiation Tool: Kotler’s and the Mature Market. Also, the added level of service that results from being in "your neighborhood" is a way for companies to showcase their high-quality service or product but also justify a higher price versus national brands. It mentions its philosophy as well as the difference between Beardbrand and similar competitors. First coined by Harvard economist Edward Chamberlin in his 1933 publication The Theory of Monopolistic Competition, product differentiation deals with the process of separating one’s products or services from the existing competition in the market. This includes creative marketing, enticing promotions and incentives, and competitive pricing. Gap or Gucci jeans. Product Differentiation Examples. Market orientation is a business approach that prioritizes identifying the needs and desires of consumers and creating products that satisfy them. Know your market. Creating new and different versions of a product is very exciting for companies. Differentiation may be reflected in the name, packaging, and promotion of a product. Product differentiation is the practice of separating your product from others in the market to create a distinct selling advantage. The strategy might be to focus on a lower price point or that it's a locally-owned business. Differentiation marketing can help companies stand out when a product isn't perceived to be much different from a competitor's, such as bottled water. If a product is perceived to be better than its competitors, consumers will consider it worth the higher price. Which teams are responsible for differentiation? Marketing team Visual brand language is often the key point of differentiation for many businesses — indeed, this is the reason that Coca-Cola outperforms Pepsi year in and year out, its brand is simply stronger.. What is the definition of product differentiation? A value proposition refers to a business or marketing statement that summarizes why a consumer should buy a product or use a service. Product Differentiation. What are customer interactions with support and success like? Focusing on your customers is a good start to successful product differentiation. The goal of this tactic is to help businesses develop a competitive advantage and define compelling unique selling propositions (USPs) that set their product apart from competitors. When functional aspects of the two products are identical, non-functional features can be highlighted. Assess where they may belong in your organization’s strategic product roadmap. Product differentiation is the process of identifying distinctive features or introducing unique features to a product to ensure that the product has a unique selling proposition within its market. "Gets out the toughest stains" implies that a certain detergent brand is more effective than others. The term often refers to a common framework known as the four Ps. The offers that appear in this table are from partnerships from which Investopedia receives compensation. It also gives them a better chance to compete against more popular products. See also: Unique Selling Proposition, Product Lifecycle. Product differentiation forces companies to think how to stand out and be chosen without necessarily playing price games but purely focusing on the quality and design of the products. Product differentiation helps your organization answer this question and focus on the unique value a product brings to its users. Product differentiation is the primary goal of … In economics and marketing, product differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. 1. 7 tips on product differentiation is … This involves detailing the characteristics that are valued by customers that make it unique. This is because any aspect of your product can be a differentiating factor. Vertical differentiation: Distinctions in products that can be evaluated in terms of quality. The answers to each of these questions could lead to a differentiating factor. Making a product stand out against a similar competitor’s product is difficult for any company. As a side effect, these industries have seen substantial increases in competitive products. A product differentiation strategy should demonstrate that a product can do everything the competing choices can but has additional benefits no one else offers. Boston matrix. There's a retro mystique about Airstream's RVs. A marketing mix includes multiple areas of focus as part of a comprehensive marketing plan. Value-based pricing is a strategy where prices are based mostly on consumers' perceived value of the product or service. What is it that makes one product ‘better’ than their competitors? Product differentiation is the primary goal of … So why does one (Coca-Cola) consistently out-sell the other? Product differentiation is a key part of your overall product strategy. In fact, virtually every department within an organization can play a role in product differentiation. Product differentiation is a marketing process in which a product is differentiated from others. KitchenAid coffee makers have a hefty, substantial feel, and a premium price to match. Differentiation marketing can also involve focusing on a niche market. Product Differentiation •A business level strategy intended to: -increase the perceived value of the firm's products Product differentiation can be achieved through: Distinctive design – e.g. And the sales team can use them to demonstrate the product's competitive advantage. Here’s a few examples of ways companies can differentiate their products from others in the market. Keurig differentiates itself with the ease of use of coffee pods. Each brand has worked hard to make itself stand out so that you'll choose it. 2. Product differentiation is the process of distinguishing a product or service from others. While many schools of thought suggest differentiation is marketing’s responsibility, that is not necessarily true. Product differentiation is a marketing strategy to show a product’s distinctiveness. Product differentiation is what makes your product or service stand out to your target audience. 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