Product differentiation is a product’s unique value on the market. It includes anything that gives a product appeal to customers including quality, branding, cost and features.
A niche is an identifiable target market that has unique preferences. In many cases, a niche is a small subset of the total market. The existence of niches represents an opportunity for small companies to compete with larger firms who may have a strong hold on the mainstream market. In some cases, large firms will respond by entering a large number of niches to fight growing competition from smaller rivals. The following are examples of a niche.
A mobile device plan for a customer who uses a great deal of bandwidth.
A credit card for customers who want a large number of benefits such as various types of insurance.
An airline that provides authentic Japanese food on its route to Tokyo.
Shoes designed to appeal to urban professional women between 21 and 31 years of age.