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Encyclopedia > Product differentiation

In marketing, product differentiation is the modification of a product to make it more attractive to the target market. This involves differentiating it from competitors' products as well as your own product offerings. It has been suggested that Product marketing be merged into this article or section. ... A target market is the market segment which a particular product is marketed to. ...


The changes are usually minor; they can be merely a change in packaging or also include a change in advertising theme. The physical product need not change, but it could. The major sources of product differentiation are follows. Advertising, generally speaking, is the promotion of goods, services, companies and ideas, usually performed by an identified sponsor. ...

  • Differences in quality or design among output (product)
  • Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing
  • Pervasive sales promotion activities of sellers and , in particular, advertising
  • Possibility of developing significant product differentiation through advertising is greatly enhanced for so called “gift goods” or “prestige goods”
  • Differentiation in the locations of sellers of the same good. Where product fills no technical function, but rather, can satisfy many different sort of personal needs or uses, psychic or physical.

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 competitors', 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). In marketing, positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. ... The marketing mix approach to marketing is a model of crafting and implementing marketing strategies. ... In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... Distribution is one of the four aspects of marketing. ... Promotion is one of the four aspects of marketing. ...


Differentiation has been shown to impact firm performance positively both theoretically and empirically. Differentiation primarily impacts performance through two mechanisms:

  • Reduced price sensitivity: Consumers may become willing to pay a premium price for the differentiating factor/s.
  • Reducing directness of competition: As the product becomes more different, Categorization becomes more difficult and hence draws fewer comparisons with its competition.

While most people would say that the implication of differentiiation is the possibility of charging a price premium, this is a gross simplification. Customers, if they value the firm’s offer will be less sensitive to aspects of competing offers, and price may not be one of these aspects. Differentiation makes customers in a given segment have a lower sensitivity to other features (non price) of the product


The disadvantage of this repositioning is that it usually requires large advertising and production expenditures. Advertising, generally speaking, is the promotion of goods, services, companies and ideas, usually performed by an identified sponsor. ...


See also

Non-price competition is a selling strategy in which one firm tries to distinguish its product or service from all competing products on the basis of attributes like design and workmanship (McConnell-Brue, p. ... It has been suggested that Product marketing be merged into this article or section. ... Market segmentation is the process in marketing of grouping a market (i. ... Product management is a function within a company dealing with the day-to-day management and welfare of a product or family of products at all stages of the product lifecycle. ... In marketing, a brand is a collection of feelings toward an economic producer. ... Country of origin is the country of manufacture, production, or growth where the article is coming from. ... A Marketing Plan is a written document that details the actions necessary to achieve a specified marketing objective(s). ... Mass customization, in marketing, manufacturing, and management, is the use of flexible computer-aided manufacturing systems to produce custom output. ... In marketing, positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. ...

External links

  • Spring 1997 - Jonathan B. Baker Director, Bureau of Economics Federal Trade Commission on Product Differentiation
  • http://www.economicswebinstitute.org/glossary/product.htm Further explanations and a free software

  Results from FactBites:
 
Product differentiation - a key concept in Economics and Management (1187 words)
Vertical differentiation occurs in a market where the several goods that are present can be ordered according to their objective quality from the highest to the lowest.
The ever growing product differentiation process due to new emergent firms/countries and the innovation efforts of incumbents has encountered in the last decades some form of brake due to the pressure of globalized, standardized homogeneous goods with a dominant design.
High product differentiation with radically different proposals is typical of the early stage of an infant industry, until a dominant design will replace technically imperfect or simply unlucky models.
Product differentiation - Wikipedia, the free encyclopedia (406 words)
In marketing, product differentiation is the modification of a product to make it more attractive to the target market.
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 is that it usually requires large advertising and production expenditures.
  More results at FactBites »

 
 

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