Product Differentiation: Definition, Strategy & Impact for Business

What is product differentiation?

Product differentiation is the process that differentiates your product or service from others. This process involves detailing the characteristics of each product that consumers value and making it unique. When successful, product differentiation creates a competitive advantage because customers see your product as superior.

Why is product differentiation important?

It is important for a company to be different from its competitors, as hundreds of new products enter the market every day. When faced with too many choices, consumers will be confused in choosing and ultimately make the decision not to buy. That’s why it’s so important for your business to find ways to make your product stand out and be perceived as unique and valuable over similar items.

The marketing team will try to explain to all customers what advantages your product offers and compare it to competitors. If your company has many products, make sure each product has a clear identity to avoid confusion when consumers make choices. Creating a different product is something that appeals to potential customers. This can help build a product’s competitive advantage over other brands.

Product Differentiation Strategy

A good product differentiation strategy can earn brand loyalty, the most important thing for any successful business. This strategy focuses on the buyer’s perception of value. As long as the seller continues to provide the highest quality of service, the customer base will remain loyal.

Market segmentation is currently faced with very competitive business competition. If a product is not consistently high quality, consumers will turn to other options. Creating a unique product will not be enough to gain a competitive advantage from product differentiation if buyers don’t know how your product differs from other brands.

The seller must have a thorough understanding of the buyer’s expectations and how the product will be used. For example, the purpose of buying a car is for transportation, but if buying the car will also give you a feeling of accomplishment and high self-esteem, then the seller will have a competitive advantage over the car he is selling.

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Another very important way of product differentiation is to contribute to the buyer’s perception that there is no brand that is similar to the product we market. Product differentiation will highlight the things that distinguish our products from competitors. Consumers will see that competitors’ products cannot meet their needs. This increases consumers’ expectations about the quality standards they will be aware of.

What are the key features that differentiate Apple’s products?

The company’s products have always been designed to be ahead of peers. Despite high competition, Apple has succeeded in creating demand for its products. As a result, the company has power over prices through product differentiation, innovative advertising, ensured brand loyalty, and hype around new product launches

Ways to Differentiate Your Products

You don’t want your product to look weird just because you want it to look different, do you? Instead, consider what is most important to your customers and let that drive your decisions about how to differentiate your product. Your product differentiation should emerge after carefully researching the competition and it should be part of your larger product vision.

1. Benefits

What value can customers get when using your product compared to competitors’ products? What problems will your product solve? How will it make prospecting easier and better? For example, your product may be the only mobile app that can know the weather in a certain area in real-time. This kind of thing is really needed for those field workers.

2. Design

Does your product have a distinct design and set it apart from the rest? For example, say your product is sleek and has a simple user experience, while your competitors’ offerings seem dated and outdated. This distinction can help customers connect with your brand. An example is the modern design sensibility of the Nest brand thermostat . Instead of copying rectangular shapes on other thermostats, the company opted for simple circles with easy-to-read, color-changing displays.

3. Price

Are the prices of your products lower or higher than those of your competitors and other products you offer? Your price should reflect the overall value of the value and features you offer. For example, you can justify a higher price if customers know that your product offers best-in-class quality. This is what the car company Ferrari does, which sets a fairly high price for each of their output cars. On the other hand, pricing your product too low can lead customers to think that your product is not the best choice.

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4. Quality

Does your product work or be of better quality than your competitors’ products? Do you offer some functionality that your competitors don’t have? Can users or consumers expect the product to last longer than other products? Your product’s competitive advantage may indeed prove to be a superior and reliable construction.

5. Customer service

Your product features may be similar to others in many ways. However, you can differentiate your product through your product experience by putting together a professional customer service team to earn a reputation for being responsive to customer needs, requests and ideas. Aftersales in business is very important. You need to know, maintaining consumer loyalty to your product is more difficult than just getting new customers.


Ultimately, how you differentiate your product should not be an arbitrary decision or a reactive response to whatever your competitors are doing. Instead, your product differentiation should emerge from a strategy of high-level goals and initiatives specific to your product and your business.

Along with that, using the right tools for your business is another thing that can make your business grow optimally. For example tools for recording transactions and accounting. In the current era of information speed, choosing an accounting application that can be used anytime and anywhere is a must for those of you who want to develop a business.