Posted by LINUX XURAAZ on January 10, 2017January 10, 2017

Product differentiation

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 way to think about differentiation is in terms of the crowded shelves of a supermarket. If you look at a particular section, such as coffee, you’ll see that each product stands out in some way such as branding, organic certification, country of origin, flavor and price. Buyers for a supermarket will typically only buy products that offer something unique to their shelves.

Establishing strongly differentiated products and services is considered key to revenue and margins in many industries. In a commoditized industry, establishing differentiation is difficult or impossible as customers see commodity products as all the same. Industries with strongly differentiated products such as luxury goods tend to support high margins.

Niche Market

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.

Behavior

A mobile device plan for a customer who uses a great deal of bandwidth.

Benefits

A credit card for customers who want a large number of benefits such as various types of insurance.

Culture

An airline that provides authentic Japanese food on its route to Tokyo.

Demographic

Shoes designed to appeal to urban professional women between 21 and 31 years of age.

Enthusiasts

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Product differentiation

Niche Market

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