Product Differentiation

Product Differentiation

What is Product Differentiation?

Product differentiation is a marketing strategy that is designed to separately identify a specific business’s products or services from the competitive products or services. A well-implemented product differentiation involves the identification and communication of the unique qualities of a product, service, or brand while highlighting the differences between the product and the competitor’s products. Product differentiation has a strong connection with developing the value proposition of the product to make sure that it has the capability to be attractive in the target market or the audience of the product.

A well-implemented product differentiation technique can help the business to achieve a competitive advantage for the product. It can lead to creating brand awareness as well as long-term brand loyalty.

Product differentiation is considered as a marketing strategy that can encourage the consumers to select one product or a brand over the other available competitor brands or products. It helps the consumers to identify the qualities that set one product apart from other similar types of products available in the market. Simply, it highlights why the consumer should choose one product over all the products in a similar category. This is majorly important when creating an impact on consumer choice. 

Product differentiation can also be helpful in identifying niche markets. It helps the business to identify the differentiating factors in the product and target a niche market using the product specialties. The references to product differentiation are usually mentioned in the name, packaging, and promotion.

Differentiation of a product may require adding new functions or features to the product or it can be simple as redesigning the package of the product. In some instances, differentiation marketing does not require any changes in the product but new promotional methods and advertising techniques.

Ideally, a product differentiation strategy should explain that the product has every function of the competitive products and provide an additional value that is exclusive to that product. Below mentioned a few most commonly used strategies in marketing products or services.


Price can be used in two ways to differentiate a product in the market. Business organizations can charge a lower price than competitive products. This can attract cost-conscious consumers. On the other hand, the companies can charge a higher price than the competitor price to imply the quality. This method is most commonly used when marketing luxury or high-end products.

Location and services

The location of the business and the type of services they provide can be helpful for the businesses to differentiate themselves from the competition. As an example, locally established businesses can use the concept of supporting the local community by recruiting local staff for the business functions and by using locally supplies raw materials for the production process. Apart from that, the business location can serve the purpose of easy access to the target market. It can help to differentiate the product, service, or brand from the competition.

Performance and reliability

Products and services can be differentiated based on their reliability and performance. As an example, electronic items and batteries that are reputed to have a long life and reliable for performance have more opportunities in the market to capture a bigger market share.

Importance of Product Differentiation

Product differentiation is important because it allows businesses to highlight the uniqueness of their products in the market and achieve a competitive advantage. Apart from that, it allows the consumers to be more aware of what the product is offering and choose the best and most value-added product that can satisfy their needs. It can create both business and consumer a win-win situation and helps to increase innovative production.

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