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In marketing, product differentiation is the modification of
a product, usually in minor ways, to make it more
attractive to the target market and to differentiate it from competitors'
products. The modification can be so slight as to be merely a change in packaging or a change in advertising theme. The physical product need not change, but it could. The objective of this strategy is
to develop a position that potential customers
will see as unique. If your target market sees your product as different from the competition's, you will have more flexibility
in developing your marketing mix. A successful product differentiation
strategy will move your product from competing based primarily on price to competing on
non-price factors (such as product characteristics, distribution strategy, or promotional variables).
The disadvantage of this repositioning of your product to a more distinct and uncluttered position in your customers' mind, is
that it usually requires large advertising and production expenditures.
see also: market segmentation, product management, marketing, brand, marketing plan, positioning
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