Product Differentiation

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Definition of 'Product Differentiation'

Product differentiation is the process of creating a product or service that is unique and appealing to a specific target market. This can be done by differentiating the product on the basis of its features, benefits, or price.

There are many different ways to differentiate a product. One way is to focus on the features of the product. For example, a car manufacturer might differentiate its cars by offering a variety of features that are not available on other cars, such as a sunroof, heated seats, or a navigation system.

Another way to differentiate a product is to focus on the benefits of the product. For example, a company that sells cleaning products might differentiate its products by emphasizing the benefits of using their products, such as how they will make your home cleaner and more sanitary.

Finally, a company can also differentiate its products by pricing them differently. For example, a company might offer a premium product at a higher price point, or a budget product at a lower price point.

Product differentiation is important because it allows companies to compete in a crowded marketplace. By differentiating their products, companies can appeal to a specific target market and increase their sales.

In addition, product differentiation can help companies to charge a higher price for their products. This is because customers are more likely to pay a higher price for a product that is unique and offers them something that they cannot get from other products.

However, product differentiation can also be a challenge. It can be difficult to come up with a product that is truly unique and appealing to a specific target market. Additionally, product differentiation can be expensive, as companies may need to invest in research and development to create a new product or to improve an existing product.

Overall, product differentiation is an important marketing strategy that can help companies to compete in a crowded marketplace. However, it is important to remember that product differentiation can be challenging and expensive.

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