HomeBusinessUnderstanding Product Differentiation and Different Ways Business Can Achieve It

Understanding Product Differentiation and Different Ways Business Can Achieve It


In a competitive market, every business wants its target customers or the public to pick its products over those of its competitors. Businesses can achieve this through product differentiation. Product differentiation is a strategy used to distinguish a business’s products from those of its competitors. There are many ways of doing so, but we need to first understand why it is important.

The Importance of Product Differentiation

Product differentiation is so important because it informs the strategies businesses use to help their products stand out from their competitors’. Increased competition in different industries and sectors can divide demand, leading to lower sales among all players in those industries or sectors.

Product differentiation is just a way to convince customers that a business’s products are better. Differentiation can also improve product recognition and brand loyalty, and therefore increase both brand equity and market share.

It also increases the likelihood of repeat purchases, helps customers know the product’s benefits (why they should choose it), and allows a business to price its products in the premium category.

Types of Differentiation

There are three main types of product differentiation: horizontal, vertical, and mixed. Horizontal differentiation is most useful when there is little to differentiate between two products. They may be priced the same and have the same benefits and so businesses need to differentiate in other ways such as through the use of colors, novel shapes, flavor, and packaging.

Vertical differentiation is when two products can be compared based on their quality. This type of differentiation can also be done through different pricing. Businesses can do vertical differentiation by improving the quality and price so that it has a competitive advantage.

Mixed differentiation uses both types of differentiation discussed above. Here, the product can be praised for its features while also remaining very similar to other products in the same segment. A good example is a laptop or TV. Although all TVs and laptops function the same, one model might have features that differentiate it from other models, either from the same manufacturer or from its competitors.

Achieving Product Differentiation

Once you understand the different types of differentiation, you can come up with ideas on how different products are differentiated. In any case, we will discuss the different ways businesses achieve this.

Package Differentiation

Your packaging draws customers’ attention while also creating a good or bad first impression. Package differentiation strategies should involve creating packaging that customers are unlikely to forget. Additionally, the packaging should be distinct enough that they can recognize it when they see it next.

There are lots of ways to do creative packaging. The use of colors and interesting designs is one way, as is using techniques that are not used too often. Take flat foil stamping, for example. The foil etching and holograms the process achieves stand out because it is novel compared to other strategies. Companies can visit a site like Universalengraving.com to learn more about the copper photoetched dies used in this process.

Size Differentiation

This is done by producing products in sizes that are convenient to customers. For example, a wastebasket that fits perfectly under the sink or in a cabinet is something a lot of people are looking for so a business can lean on the size of its wastebaskets for differentiation.

Brand Differentiation

This is where businesses use the power of their brand to differentiate a product. This includes everything from how the product is designed and presented to the messaging used in its promotion. The product should fulfill all or almost all the client’s needs and be presented in a way that showcases how it solves their needs for the best results.

Feature Differentiation

Adding a basic ingredient or feature can help with product differentiation. Check whether your manufacturing plants can change qualities such as color, compactness, water resistance, faster action, and so on to help you beat the competition.

Because the features you can add to a product are endless, feature differentiation is one of the most common ways to achieve product differentiation.

Bonus Differentiation

A business can provide a bonus that works with and makes the main product better and that does not cost them much to add. For example, a company that sells detergent can pair its product with bleach when it gets to the shelf.

Every business differentiates its products in some way, even in cases where it does not think or know it is doing it. The key is putting conscious effort into giving your product the features and characteristics that help it stand out and that give customers a reason to choose it over that of your competitors.


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