1c. The Purpose of Product Differentiation

What is product differentiation?

An attempt by a business to distinguish its products from those of competitors. This involves creating functions or features of the product (or firm) which help it to stand out from its competitors

How does product differentiation help a business?

It helps a firm develop a competitive advantage by creating a unique selling point (USP). It can be tangible (clear physical differences) or based on consumer perception. Strong differentiation enhances marketing and sets a product apart from competitors

What is a competitive advantage?

Anything that gives a company an edge over its competitors, helping it attract more customers and grow its market share

What are the benefits of successful product differentiation?

• Increases demand

• Strengthens brand loyalty

• Allows the business to charge higher prices

What are examples of successful product differentiation?

• In 2014, in Singapore, Hyundai Cars introduced a 3-year warranty on all new cars when the industry standard was 1 year

• Green and Black use Fairtrade cocoa AND sugar in the production of their chocolate; ethical and supports fair wages for farmers, this makes their brand stand out to consumers who care about sustainability and ethical sourcing, giving them a USP