The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. Airstream Main competitors: Fleetwood, Jayco, Winnebago. 1. Shiny object syndrome: People always want the latest and best-looking tech, either due to a fascination towards the product category or simply because of social pressure. Apple Macbook Pro. Product differentiation means that some feature, physical attribute, or substantive difference exists between a product and all other alternatives. This type of differentiation is very easy to copy by your competitors and is often very short-lived. A product’s unique selling proposition (USP) can be literally anything that makes it unique or different from others out there. If it comes with a reusable filter, the savings on paper filters are highlighted in packaging and advertising it. The site arose from my fascination with how modern-day businesses utilize technology and product-led thinking to become dominant players in their industry. A differentiated product is unique by itself. Establishing a differentiated product experience oftentimes yields a multitude of benefits. Examples include Coca Cola vs. Pepsi or Pampers vs. Huggies. Lists of business strategies and tactics. Differentiation is a marketing technique that enables a company to meet the specific needs of different market sectors by developing different product offers or versions for each, rather than attempting to cover all sectors with a standard product. Product differentiation can be categorized into three distinct themes, namely horizontal, vertical, and mixed differentiation. They know the quality of each one. Here are 9 famous brands that have honed in on their differentiation and succeeded as a result: Lush Differentiator: bringing a natural beauty brand to the makeup industry as an authentic alternative to traditional products. Customer experience is how your customers think and feel about your brand. One common strategy is to focus attention on different physical characteristics. Specify target audience: Knowing what it is that draws customers to a product allows businesses to specifically target customers that are attracted by these sets of features. Vertical differentiation exists when consumers compare a product according to one feature – quality. Understanding technology adoption life cycles can help you to proactively do that. Which begs the question: why do people perceive and rate comparable products that different? The differentiation strategy of product leaders is to deliver superior value through leading-edge products that enhance customer benefits. Well, three rounds and wrong guesses later, that sweet ol’ Coke she claimed to love so much wasn’t that great of a distinctive taste. There's a retro mystique about Airstream's RVs. The increased competition has divided the demand among different players in the market. Customers are willing to bear the cost, especially when parts of the differentiation arises from a superior set of features or components. This material may not be published, broadcast, rewritten or redistributed. A product will become differentiated from that of the competitors if its form (size, shape, or … All rights reserved. What is the definition of product differentiation? A large proportion of trade today takes place in highly differentiated products other than homogeneous products, especially in manufactured products. Differentiation strategies can be used in a variety of industries and business types. Focusing on your customers is a good start to successful product differentiation. 1021 Words 5 Pages. By using our services, you agree to, Copyright 2002-2021 Simplicable. BusinessProductPrivacy PolicyTerms of Service, Factors Influencing Product Differentiation. With horizontal differentiation… Product differentiation is a product's unique value on the market. For this process to be successful, it is essential to identify and communicate the product’s unique value proposition while highlighting the distinct differences to competing products. Product differentiation is a process used in marketingthat identifies and communicates the unique value a product or brand brings to the table when compared to competitors. First coined by Harvard economist Edward Chamberlin in his 1933 publication The Theory of Monopolistic Competition, product differentiation deals with the process of separating one’s products or services from the existing competition in the market. She claimed that she could taste the difference between a Coca Cola and Pepsi while being blindfolded. Making a product stand out against a similar competitor’s product is difficult for any company. Explain and give an example of these terms in your own words. Nowadays, Zoom is furthermore expanding into hardware products and networking which allows them to serve customers end-to-end.eval(ez_write_tag([[300,250],'productmint_com-large-leaderboard-2','ezslot_8',177,'0','0'])); MasterClass offers online video classes that are taught by top performers in their respective fields. Or just ask Evan Spiegel what he thinks of Instagram’s blatant copy of its Story function. Oftentimes, customers assess those types of products by personal preferences. Those that are relevant to Apple are product features, product mix, links with other firms, and reputation. Consumers can say “Product A is better than Product B.” For example, in the pharmaceutical industry, a person can decide whether to get a branded medication or a generic. Take, for instance, the case of Slack, which was just recently surpassed by Microsoft Teams in terms of user base. Lemonade Insurance provides customers with renters, homeowners, and pet insurance policies. Differentiation … Now that we’ve looked at the categories of product differentiation, let’s look at the specific factors that can differentiate products. Within vertical differentiation, products can be assessed on one factor. Product differentiation is what makes your product or service stand out to your target audience.It’s how you distinguish what you sell from what your competitors do, and it increases brand loyalty, sales, and growth.. Product Differentiation Examples. easiness to order). Oftentimes, users can expect to receive compensation for their claims within a matter of hours. In recent times, Zoom has risen to worldwide prominence, becoming the poster child for the … Use these ideas to change up your product expectations in a differentiated lesson. Ask too low of a price, however, and customers may not see your product as truly valuable. The KAYAK Business Model – How Does KAYAK Make Money? Apple is a multinational technology company (you may have heard of them ;)) that produces super popular products like the iPhone and MacBook Pro laptops. An example of product differentiation is with the series of Apple products such as the I Phone, Mac Air laptop, and the I Pad. Examples Of Product Differentiation. In recent times, Zoom has risen to worldwide prominence, becoming the poster child for the accelerated growth digital businesses experienced during the pandemic. The Venmo Business Model – How Does Venmo Make Money? Quality: How does the quality, reliability, and ruggedness of your product compare to others on the market? 2. At night, I work on expressing my weird thoughts through this blog. Some of the most prominent examples include Apple’s iPhone, Sony’s PlayStation, or Toyota’s Corolla car.eval(ez_write_tag([[300,250],'productmint_com-banner-1','ezslot_5',173,'0','0'])); Let’s look at some recent examples in the section below. While some students may succeed with straightforward worksheets, others require a variety of assessment options. The company’s product is differentiated through a noble social mission, ease of use, transparency, and speed of delivery (i.e. Hi folks, my name is Viktor! The product, price and promotion portions of the marketing mix indicate what your best options are for product differentiation. This is done by firms to raise their market share of a product. All of these products are unique to what Apple’s competitors are selling which is why there is so much buzz around these products. The superior quality allows them to charge above-average prices for their courses. By convincing customers and prospective buyers of the superiority and uniqueness of their products, the company creates a perceived competitive advantage. 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 … Here are a few product differentiation examples of businesses that have made the strategy work for them. Factors include: There are countless instances in business history where companies successfully differentiated themselves from the competition. Think of the medical store that provides medicines 24 hours, 7 days a week. Other competing platforms, like Udemy or Coursera, rely on ‘everyday’ individuals and academic scholars to create educational content. Differentiation strategy examples: Happy Socks The company created high-quality socks with gorgeous and unique designs, and put them in beautiful distinctive boxes. A product can be differentiated based on the form of the product. Beardbrand positions their products with a specific product ethos. The policies can be booked online within a matter of minutes. Product differentiation is a viable strategy, especially if the company exploits the conceptual distinctions for product differentiation. Here’s how product differentiation can benefit a business.eval(ez_write_tag([[250,250],'productmint_com-medrectangle-4','ezslot_3',171,'0','0'])); Increased brand awareness: A differentiated product is, by definition, distinct from its competition. A great example is the smartphone market, which offers products based on categories such as price, operating speed, design, or camera performance. Report violations, 7 Examples of Sustainable Competitive Advantage, How to Build a Brand You Can Be Proud Of ». This is how a luxury brand like Ferrari can command a top asking price for their cars. Example: Apple — Differentiation Strategy Apple Inc. is an American corporation that designs and manufactures computer hardware, software and other consumer electronics. 2. T-Mobile. What students produce is a demonstration of what they have learned, also known as an assessment. This is a marketing process that highlights the unique features of a company’s products as compared with its revivals’. Product differentiation on MasterClass comes in the form of enhanced quality, both in the form of world-class instructors and high-end video production. Product Differentiation – Creating a product with better features, performance or efficacy. Product Differentiation Defined. Their priority is to deliver the best new product, at any cost. It mentions its philosophy as well as the difference between Beardbrand and similar competitors. The company headquarters is in Cupertino, California, CEO and co-founder is Steve Jobs and the company boasts of 284 retail locations spanning 10 different countries. Product Differentiation depends on how the brand sees its product, and how the customer recognizes the product. This can then be communicated in their marketing and sales strategy, for instance when talking to customers or creating marketing campaigns. First and foremost, there is the chance of being copied by competitors. ETSY. This allows customers to easier recognize it, thus increasing awareness of the product (and consequently brand). Examples of Differentiation There are many ways to differentiate your product. It is process of distinguish a product or services from similar offerings in the market. How to leverage psychology to innovate, influence, motivate and sell. T-Mobile is a cellular company that's shedding … And if there's time, I cuddle my cat.. productmint.com provides tailored content on all things business and tech. Define unique selling proposition: Product differentiation allows companies to narrow down what it is that makes their products superior to the competition. Example classes include tennis lessons from Serena Williams or cooking lectures from Gordon Ramsey. Danger - A white water rafting tour provides just the right level of risk for thrill seeking customers. There are three types of product differentiation. When users file a claim, smart AI programs will assess the claim first. The Betterment Business Model – How Does Betterment Make Money? In this article we will discuss about the sources and importance of product differentiation. In addition to copycats, there is a multitude of other risks.eval(ez_write_tag([[250,250],'productmint_com-box-4','ezslot_6',172,'0','0'])); Too much or too little focus: When specifying a target user base, companies may run into the risk of being either too broad (e.g. The physical structure, size … Examples of Product Differentiation Safety - An airline has a better reputation for safety than its competitors. Differentiated Product Ideas. For example, if you are in the growth phase, you should increase the number of different versions you have in a product line to more closely target different markets. The different factors on which the process is implemented include: This is not to be confused with a value propositionwhich communicates your overarching promise. Differentiation strategy examples … Starbucks Another great example of user-generated content, Starbucks’ White Cup Contest launched in April 2014. If your differentiating factor lies within something that may become obsolete in the near feature, it is advisable to revamp the product or pivot into a new direction. An example of Spatial Differentiation is a firm locally sourcing inputs and producing there product. Charging higher price points: A differentiated product experience allows customers to charge a higher price for their offerings. Horizontally differentiated products provide the same offering, both in terms of quality and price. For example, you can justify a higher price if customers recognize that your product offers unsurpassed quality. Typically, this process starts with adding additional features to the product th… Just take a look at how much you’d pay for H&M and Nike socks, respectively. A product can be differentiated based on its form, shape, quality, durability, reliability, repairability, style, design, or some other features of the product. The Affirm Business Model – How Does Affirm Make Money? Now, what does this look like in action? Your business has only two departments: marketing and innovation. Online artisan store and shopping gallery, Etsy offers its users the chance to showcase their … Let us take a look at some product differentiation examples. The company’s superior product and low price point helped it to differentiate against legacy players such as Skype, Cisco, and others. There are 3 types of product differentiation: Horizontal differentiation – Difference in products that cannot be estimated in terms of quality. Clearly expressing your distinctive advantages is therefore essential. Successful product differentiation creates competitive advantages, including a heightened awareness of the product and brand, the ability to charge higher prices, and target customers more effectively. Quality. For example, a … Product leaders do not have the lowest-cost operations because their customers are not as price-sensitive. Form. Last Updated on October 3, 2020 by Viktor. Chapter 6: Imperfect competition and international trade. Product variation refers to any change that alters ‘the physical characteristics of a product’ or ‘the conditions under which it is sold’ like changing the colour of a toothpaste tube. 1. The Peloton Business Model – How Does Peloton Work & Make Money? A way to think about differentiation is in terms of the crowded shelves of a supermarket. I recently made a 5€ bet with my girlfriend involving a blindfold and two very sweet drinks (no you perv, no kinky shit!). Quality of service (e.g. Conversely, where there is high reward, risk is not far around the corner. how fast the claims are handled). For example: 7-Eleven is a 24 hours convenience store providing fresh foods and beverages, also groceries and dine facilities. By day, I lead a tech team of 10 folks for an e-commerce startup. Zoom. Examples of Differentiation in Marketing. Top Competition: AT&T, Verizon Wireless. In fact, they created such a great product that people started buying socks as a gift to their family and friends. Product differentiation can be achieved in a multitude of ways. A feature that also differentiates the two medications is ‘price.’ Brand names are much more expensive than generic medications. There are primarily 6 ways to differentiate, These include: 1. Edward Chamberlin originally coined this concept in The Theory of Monopolistic Competition.Simply put, it refers … Assessing such an opportunity is therefore tied to the Total Addressable (TAM) as well as Total Obtainable Market (TOM). Taking a look at Apple’s launch of the iPhone 11 shows the company’s willingness to target a different set of consumers for the same product category. Furthermore, the company donates any claim surplus to a charity of the user’s choice, which reduces the instances of insurance fraud. This has made it very important for businesses to make their customers understand what different they have to Hereby, products are differentiated based on a multitude of factors. Service Differentiation – This includes not only delivery and customer service, but all other supporting elements of a business such as training, installation, and ease of ordering. Here customers across the country were asked to doodle on their Starbucks cups and submit pictures as entries. Also, Disney’s operation in Orlando, Florida is another example of product differentiation according to location. customer care or repair programs), Product experience (e.g. For instance, with quality being equal, socks can be priced differently. What do they want? Examples of Product Differentiation. Product differentiation: Product differentiation is process commonly used by business. Here’s a few examples of ways companies can differentiate their products from others in the market. It resonates with a certain group of people who then become devoted custome… Zoom launched in 2011 and quickly took the video communications world by storm. Race to the bottom: In a globally connected world, there will always be someone willing to offer cheaper prices (especially in the software world, where physical movements of goods is not a limiting factor). 1. If your product differentiation advantage lies within one or few features, competitors catching up is just a few sprint iterations away. The Vinted Business Model – How Does Vinted Work & Make Money? 3. These characteristics allow them to find the right channels -to target consumers, such as YouTube ads on fitness-related videos. Indoor bike maker Peloton, for instance, knows that its customers are willing to pay higher prices, are fitness enthusiasts, and possibly don’t mind a digital experience. Cookies help us deliver our services. Part of the answer lies in the topic we are going to cover in this article: product differentiation. The winning entry would be the template for a new limited edition Starbucks cup. It includes anything that gives a product appeal to customers including quality, branding, cost and features. The Klarna Business Model – How Does Klarna Work & Make Money? by going too far with a message) or too niche. What is product differentiation? Around the corner How to leverage psychology to innovate, influence, motivate and sell Apple... In products that can not be estimated in terms of user base computer hardware, and. Dominant players in their industry to change up your product compare to on! You can be achieved in a variety of assessment options country were asked to doodle on Starbucks..., customers assess those types of product differentiation is a firm locally sourcing inputs and producing product differentiation examples.! 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