Product differentiation is the introduction of diversity into products that satisfy one need and have the same basic characteristics. This diversity creates additional barriers to entry into the industry. This is due to the fact that a certain brand of products is more attractive for a specific category of consumers. The so-called "brand loyalty" is being formed - brand loyalty. As a result, new companies are forced to overcome prevailing consumer stereotypes. Especially difficult situation is for new firms entering the market in conditions of quite aggressive advertising of enterprises that have existed for a long time.
Product differentiation forces companies to spend additional funds on the formation and maintenance of their image.
Before any company is the question of how to stay in the market. In a struggle, one should not only be able to satisfy needs, but also do it better than competitors, thus creating significant advantages.
Strengthen your position in the market by distinguishing your product. There is a certain differentiation strategy.
The development and implementation of product differences in order to distinguish it from a competitive one is carried out in several areas: efficiency of use, additional features, level of durability, comfort, maintainability, reliability, as well as design and style.
By introducing additional features, the basic functions of the product are greatly expanded. Typically, these features are added to an existing product sample. In order for product differentiation in this direction to be most effective, consumers themselves are polled. Based on the data received, the most attractive improvements are introduced.
The effectiveness of the use of products is determined by the quality with which the product performs its main tasks. In some cases, a gradual improvement in quality is used, which usually causes a gradual increase in market share and profit margin. But usually the quality of the goods remains unchanged throughout the entire production period.
The level of comfort is the degree of conformity of the goods to the declared characteristics.
Durability is an indicator of the product's service life. It should be noted that this characteristic does not always attract the consumer. This is especially true for goods whose models are rapidly becoming obsolete in the context of scientific and technological progress.
An attractive feature for many consumers is reliability.
Of no less importance is the maintainability of the product. To attract more customers, manufacturers of one or another type of product offer free or preferential after-sales service.
Attractive product features are design and style.
Style is a kind of emotional perception of the product or packaging. For a specific product group, this characteristic is especially important. For example, for cosmetics, certain foods, perfumes and more.
It is believed that product differentiation is most effective when improving one, but a strong difference. However, the company's behavior regarding giving the product one or other advantageous features should depend mainly on the specific market conditions. In addition, product differentiation in different industries is carried out in different ways. Moreover, there are strictly standardized types of goods, the characteristics of which are almost impossible to improve. For example, they include meat, steel or medicine.