Product differentiation

From Nemo

Jump to: navigation, search

In economics and Export marketing, product differentiation (also known simply as "differentiation") is the process of distinguishing a product or offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own product offerings. The concept was proposed by Edward Chamberlin in his 1933 Theory of Monopolistic Competition.


Rationale


Differentiation can be a source of competitive advantage. Although research in a niche market may result in changing a product in order to improve differentiation, the changes themselves are not differentiation. Marketing or product differentiation is the process of describing the differences between products or Import services, or the resulting list of differences. This is done in order to demonstrate the unique aspects of a firm's product and create a sense of value. Marketing textbooks are firm on the point that any differentiation must be valued by buyers (e.g.). The term unique selling proposition refers to advertising to communicate a product's differentiation.


In economics, successful product differentiation leads to monopolistic competition and is inconsistent with the conditions for perfect competition, which include the requirement that the products of competing firms should be perfect substitutes. There are three types of product differentiation: 1. Simple: based on a variety of characteristics 2. Horizontal : based on a single characteristic but consumers are not clear on quality 3. Vertical : based on a single characteristic and consumers are clear on its quality.


Ethical concerns


Some product differentiation approaches raise ethical concerns. These include techniques based on customers' ignorance, rebranding existing products to sell them as new or introducing anti-features that create artificial limitations to otherwise fully functional goods.


References:

1.http://en.wikipedia.org/wiki/Product_differentiation


External Links:

/wiki/images/1/17/Fish1.png /wiki/images/e/ea/Fish2.png /wiki/images/f/fa/Fish3.png /wiki/images/f/ff/Fish4.png /wiki/images/4/40/Fish5.png /wiki/images/c/c5/Fish6.png
Personal tools