Differentiation marketing can also involve focusing on a niche market. Product differentiation A product portfolio is the range of items sold by a business. 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. Product differentiation seeks to distinguish a product from a competing product to make it more attractive to a specific target market. Within firms, product differentiation is the way multi-product firms build their own supplied products' range. Ready to start focusing on product differentiation but not sure where to start? Product differentiation is a process used in marketingthat identifies and communicates the unique value a product or brand brings to the table when compared to competitors. Those include horizontal differentiation, vertical differentiation, and mixed differentiation. Here’s a few examples of ways companies can differentiate their products from others in the market. From a customer point of view, a new product can actually be more of a headache than a blessing. Product differentiation can be achieved through: Distinctive design – e.g. 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. 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. Also called “simple differentiation,” mixed differentiation refers to differentiation based on a combination of factors. How your company approaches product differentiation will vary depending on your industry and your target market. Market orientation is a business approach that prioritizes identifying the needs and desires of consumers and creating products that satisfy them. What is product differentiation? Here’s a few examples of ways companies can differentiate their products from others in the market. And it’s worth noting that there is no right way to approach product differentiation. As stated earlier, the differences between the products can be physical in nature or measurable, such as the lowest-price gym in a region. For example, product differentiation is vividly on display among the many coffee maker brands on today's market. Quality: How does the quality, reliability, and ruggedness of your product compare to others on the market? Each brand has worked hard to make itself stand out so that you'll choose it. Value Proposition: Why Consumers Should Buy a Product or Use a Service. 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. Product differentiation is a marketing process in which a product is differentiated from others. A product’s differentiation strategy, … With vertically differentiated products, the price points and marks of quality are different. A marketing mix includes multiple areas of focus as part of a comprehensive marketing plan. "Gets out the toughest stains" implies that a certain detergent brand is more effective than others. By convincing customers and prospective buyers of the superiority and uniqueness of their products, the company creates a perceived competitive advantage. What does your product or service do/accomplish/offer that the competition does not? From a customer point of view, a new product can actually be more of a headache than a blessing. Which teams are responsible for differentiation? In this article, we will provide an overview of product differentiation and answer several common questions about this process. Product Differentiation •A business level strategy intended to: -increase the perceived value of the firm's products Product differentiation is a marketing strategy whereby businesses attempt to make their product unique to stand out from competitors. Product differentiation is a marketing strategy to show a product’s distinctiveness. A value proposition refers to a business or marketing statement that summarizes why a consumer should buy a product or use a service. What types of key customer needs are not being met with existing options? What are customer interactions with support and success like? Assess where they may belong in your organization’s strategic product roadmap. 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. Keurig differentiates itself with the ease of use of coffee pods. In actuality, no company can measure and quantify the level of coolness or style their product offers. If it comes with a reusable filter, the savings on paper filters are highlighted in packaging and advertising it. For smaller, local companies that are trying to stand out from national brands, it's common to emphasize that they're a local business. Product differentiation may involve, promotions, product packaging, product design, quality, and extra features. If Company X produces a coffee maker virtually identical to that of Company Y, Company X may offer a version at a lower cost. 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. Another implication of product differentiation is that very often, it brings brand loyalty into the picture. Differentiation may be reflected in the name, packaging, and promotion of a product. 1. In increasingly crowded competitive landscapes, differentiation is a critical prerequisite for a product’s survival. A product’s unique selling proposition (USP) can be literally anything that makes it unique or different from others out there. The marketing team communicates these unique qualities through their campaigns and promotions. The answers to each of these questions could lead to a differentiating factor. A successful product differentiation campaign raises consumer interest and gives them a reason to believe they need their product versus another. The strategy can be merely an appealing change in design or styling. So what is it that pulls similar products apart in the marketplace? Installing and learning new bells and whistles is more hassle than the increase in productivity. Amazon Basics, as always, sets an unbeatably low price point. 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. Those other products can include competitors but also a company’s own products, to prevent overlap between the offerings. Goal is to be a quasi-monopolist. Is the product reliable or prone to outages? Examples of differentiated products might include the fastest high-speed internet service or the most gas-efficient electric vehicle on the market today. This involves detailing the characteristics that are valued by customers that make it unique. In contrast to horizontal differentiation, vertically differentiated products are extremely dependent on price. The brand name Fancy Feast is intended to convey that this is a high-quality cat food that your pet will love, and the advertising reinforces that claim. When functional aspects of the two products are identical, non-functional features can be highlighted. Brand management is a marketing function that uses brand management techniques to increase the perceived value of a product line or brand over time. Differentiation strategies can be used in a variety of industries and business types. How difficult is it to purchase the product? Product differentiation is process used by companies to clarify the differences between their products and other products on the market. Price can work both ways, meaning companies can charge the lowest price to attract buyers that are cost-conscious–Costco, for example. The term often refers to a common framework known as the four Ps. Typically, this process starts with adding additional features to the product th… Product differentiation is why a customer buys your product. However, differentiation is more than just how marketing positions the product—every single customer touchpoint is an opportunity for differentiation. Product differentiation is the process of distinguishing a product or service from others. What do they want? Here are a few product differentiation examples of businesses that have made the strategy work for them. Essentially, product differentiation is a great technique for enforcing brand positioning and marketing strategies necessary for acquiring loyal customers. Product differentiation is the primary goal of … Product Differentiation Tool: Kotler’s and the Mature Market. 7 tips on product differentiation is … 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. What is the definition of product differentiation? If a product is perceived to be better than its competitors, consumers will consider it worth the higher price. Product differentiation is the process of distinguishing the product from that of the competitors so that consumers can be attracted. What is product differentiation? When a company efficiently differentiates its products, and few essential products stand out, it usually brings out brand loyalty on the consumer’s part. Our examples above have only scratched the surface on what different factors can differentiate a product. It can be useful because they then have a chance to compete against bigger companies. Horizontal differentiation refers to any type of differentiation that is not associated with the product’s quality or price point. Examples of Vertical Differentiation: Branded products vs. generics, A basic black shirt from Hanes vs. a basic black shirt from a top designer, the vehicle makes. As a result, product differentiation is often subjective since it's aimed at altering customers' evaluation of the benefits of one item compared to another. The references to these qualities are reflected in the product's packaging and promotion, and often even in its name. 3. There are three types of product differentiation: 1. Types of product differentiation in marketing. Companies introducing a new product often cite its lower costs to buy or use. Focusing on your customers is a good start to successful product differentiation. There's a retro mystique about Airstream's RVs. What matters is the degree to which consumers perceive a difference in products. The ideal process is different for every product, team, and organization. Essentially, product differentiation is a great technique for enforcing brand positioning and marketing strategies necessary for acquiring loyal customers. As a side effect, these industries have seen substantial increases in competitive products. Hill's Science Diet conveys the message that this cat food was developed by real experts. 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. To distinguish the product from another product by a competitor or by the same organisation. Creating new and different versions of a product is very exciting for companies. Product differentiation is intended to prod the consumer into choosing one brand over another in a crowded field of competitors. Product differentiation is a marketing process that has the objective of making customers perceive the product of a specific firm as unique or superior to any other product belonging to the same group, and so creating a sense of value. It mentions its philosophy as well as the difference between Beardbrand and similar competitors. Sometimes the prices are the same, as Pepsi and Coca-Cola, other times they are wildly different, e.g. Product differentiation is one of the effective ways a company can set itself apart from other players in the market. 2. Product differentiation is the primary goal of … It details what what sets your product apart from you competitors’ products.The product differentiation process involves discovering the characteristics of your product … Simply put, product differentiation is the process a company uses to make its products or services stand out. Product differentiation is a key part of your overall product strategy. What is Product Differentiation? Those other products can include competitors but also a company’s own products, to prevent overlap between the offerings. 1. The importance of product differentiation for Daisy Outdoor Products was the difference between going out of business or thriving during the worst economic downturn of the 20th century. Product Differentiation Tool: Kotler’s and the Mature Market. A way to think about differentiation is in terms of the crowded shelves of a supermarket. This involves differentiating it from competitors' products as well as a firm's own products. What Is Product Differentiation? This includes creative marketing, enticing promotions and incentives, and competitive pricing. When differentiating a product from others, it does not necessarily have to be completely different or new. product differentiation definition: emphasis on the difference between a particular product and those that are similar: . 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. Hey, Product Differentiator for Shopify The Product Differentiator app will let you allow your customers to differentiate or compare products of similar categories hence avoiding any confusion in their minds and reducing abandoned checkout rates. To make it simple, compare two products of completely unrelated … Ideally, a product differentiation strategy should demonstrate that the product can do everything the competing choices can but has an additional benefit that no one else offers. Now that we’ve looked at the categories of product differentiation, let’s look at the specific factors that can differentiate products. 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. Product differentiation is one of the effective ways a company can set itself apart from other players in the market. 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.. KitchenAid coffee makers have a hefty, substantial feel, and a premium price to match. Products that are considered reliable and offer long-term value are often touted as better than the competition. It’s a case where it is possible to say that one good is better than the other. : Mineral water brands. It’s how you distinguish what you sell from what your competitors do, and it increases brand loyalty, sales, and growth. Gap or Gucci jeans. A product’s unique selling proposition (USP) can be literally anything that makes it unique or different from others out there. This means making the product different from its competitors. In terms of product differentiation, it doesn't matter if a product is predominantly the same or different than another product. 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. 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. Goal is to be a quasi-monopolist. It also means knowing what your customers want so that you can emphasize features that are important to them. And, there is a general understanding that if all the options were the same price, there would be a clear winner for “the best.”. What is it that makes one product ‘better’ than their competitors? Also, increased performance is often used as a differentiating factor for products such as batteries. Making a product stand out against a similar competitor’s product is difficult for any company. These products offer the same thing at the same price point. 2. It resonates with a certain group of people who then become devoted custome… It is because once a consumer is satisfied with a few pr… Product differentiation is process used by companies to clarify the differences between their products and other products on the market. It can be analysed using the Boston Matrix. Hey, Product Differentiator for Shopify The Product Differentiator app will let you allow your customers to differentiate or compare products of similar categories hence avoiding any confusion in their minds and reducing abandoned checkout rates. A product differentiation strategy may require adding new functional features or might be as simple as redesigning packaging. Product differentiation refers to the strategy used by businesses to highlight the unique features and benefits of its product or service to separate it from competitors. So why does one (Coca-Cola) consistently out-sell the other? In fact, virtually every department within an organization can play a role in product differentiation. Product differentiation is what makes your product or service stand out to your target audience. And the sales team can use them to demonstrate the product's competitive advantage. These two sodas are largely the same and can be bought for a similar price. Horizontal differentiation: Distinctions in products that cannot be evaluated in terms of quality. No credit card required. Vertical differentiation: Distinctions in products that can be evaluated in terms of quality. Sometimes differentiation marketing doesn't require any changes to the product but involves creating a new advertising campaign or other promotions. The same is true in most sectors, from cars to cell phones, and fashion to financial products. Who are the competing organizations and what do they offer? It’s not how the brand sees its product, it is how the customer recognises the product. Value-based pricing is a strategy where prices are based mostly on consumers' perceived value of the product or service. A differentiated product can increase brand loyalty and even survive a higher price point. Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. By creating a USP (unique selling proposition) you can elevate your product in the minds of consumers and create a specific niche for your product. Take note of the market your product serves. E.g. This is because any aspect of your product can be a differentiating factor. Product Differentiation Examples. Customer se… A product differentiation strategy should demonstrate that a product can do everything the competing choices can but has additional benefits no one else offers. Product Differentiation •A business level strategy intended to: -increase the perceived value of the firm's products See also: Unique Selling Proposition, Product Lifecycle. For small companies, this can be great. How is the product different or unique from others in the same category? Product Differentiation Strategy. If successful, product differentiation can create a competitive advantage for the product's seller and ultimately build brand awareness. The strategy might be to focus on a lower price point or that it's a locally-owned business. Often, this type of differentiation gets lumped in with horizontal differentiation. Examples of Horizontal Differentiation: Pepsi vs Coca Cola, bottled water brands, types of dish soap. The actual difference in the product and that of the competition might be minuscule or nonexistent. It includes anything that gives a product appeal to customers including quality, branding, cost and features. However, companies can also charge higher prices to emphasize that it's a luxury product and worth it–such as a luxury car. Dyson; Apple iPhone, iPad & iMac Product differentiation is a product's unique value on the market. If you go to the coffee isle of your local supermarket you may find 10 brands of coffee. How is the product different or unique from others in the same category? Beardbrand positions their products with a specific product ethos. It identifies the qualities that set one product apart from other similar products and uses those differences to drive consumer choice. What is product differentiation? There are several different factors that can differentiate a product, however, there are three main categories of product differentiation. Below are a few of the most common strategies employed to differentiate a product or service. While many schools of thought suggest differentiation is marketing’s responsibility, that is not necessarily true. Product Management vs. Project Management. Product differentiation helps your organization answer this question and focus on the unique value a product brings to its users. Here are a few steps to get you headed in the right direction. When utilized successfully, product differentiation creates a competitive advantage as customers view your product as superior. We usually think first of marketing because it’s marketing who focuses on product positioning and is often the first touchpoint for a customer or prospect. Now that we’ve looked at the categories of product differentiation, let’s look at the specific factors that can differentiate products. So why does one ( Coca-Cola ) consistently out-sell the other only scratched the surface on what factors. Product ‘ better ’ than their competitors the competing choices can but has additional benefits no one offers... New advertising campaign or other what is product differentiation to a target market s unique selling proposition ( ). 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