Each brand differentiator is broad, but they consume a lot of resources and expertise to achieve. This may include products within the company or of the same line. Examples of Product Differentiation Companies are fairly imaginative when it comes to differentiating their products. Example: Apple — Differentiation Strategy Apple Inc. is an American corporation that designs and manufactures computer hardware, software and other consumer electronics. Examples of Products With Differential Pricing. A mid-day, off-season hotel reservation at a small boutique hotel is frequently much cheaper than one booked for a weekend during the height of the tourist season. A major aspect of a product differentiation strategy comes from product design. Positioning is a strategic process that marketers use to determine the place or “niche” an offering should occupy in a given market, relative to other customer alternatives. However, they cannot determine which one is superior in quality. Heads up: Those two concepts will come up in the product differentiation examples below. Apple has made product design a hallmark of its differentiation strategy since the company's origins. The segment in which the product is Unique. Vertical differentiation exists when consumers compare a product according to one feature – quality. Below are twelve examples of competing brands that have tailored their marketing to accentuate their differentiation to the consumer. Only in one product (or few); The rest of its products may be ordinary; That product is targeting a small Market segment. Products that display a different visual style, include different features or handle different tasks stand out from those offered by the competition. Michael Porter has argued that a firms strengths ultimately fall into one of two headings: cost advantage and differentiation. Definition and examples, Competitive advantage means having an edge, Discovering New Points of Differentiation, regarding vertical differentiation and horizontal differentiation. Consumers can say “Product A is better than Product B.”. One method that businesses use to establish differential pricing is granting volume discounts. When you position a… Examples of Successful Strategic Alliances, Organizations Exempt From Fair Labor Standards Act. A feature that also differentiates the two medications is ‘price.’ Brand names are much more expensive than generic medications. Online artisan store and shopping gallery, Etsy offers its users the chance to showcase their handmade wares and... WALMART. 9 Perfect Brand Examples of Why It Pays to Differentiate Lush. He has contributed to several special-interest national publications. Put simply; it is the process of distinguishing a good or service from others, i.e., making it stand out. Product differentiation is the introduction of unique, distinctive characteristics or features to a product to ensure a USP (unique selling proposition) of the product. SmallBusiness.Chron.com says the following regarding vertical differentiation and horizontal differentiation: “Horizontal differentiation refers to distinctions in products that cannot be easily evaluated in terms of quality.”, “This stands in contrast to vertical differentiation, where the distinctions between products are objectively measurable and are based on the products’ respective level of quality.”. With all of Porter’s Five Forces lower, a company may see economic value from a product differentiation strategy. Are Theater Workers Exempt From Federal Overtime Laws? In many industries, the barrier to entry has dropped significantly in recent years. Product differentiation is a marketing process in which a product is differentiated from others. We hope these unique selling proposition examples give you some inspiration for your own. It invests in production, distribution, … When we choose between a Coke, Pepsi, or Dr. Pepper, for example, taste drives our decision. There are many well-known brands and businesses implementing a wide variety of strategies. It made the car ‘fast’ because it wanted to appeal to a specific group of people. © 2020 - Market Business News. Examples of Products With Differential Pricing. In this ehowfinance video, Alex Guerreros explains what differentiation is. Therefore, we only consider one characteristic. When a person is faced with a shelf of products or similar services, … When differentiating a product from others, it does not necessarily have to be completely different or new. Examples of product differentiation including unique design, customer service, and price. A firm’s success in strategy rests upon how it positions itself in respect to its environment. Conclusion. They know the quality of each one. Examples of Differentiation in Marketing. Perhaps, their products would not be so desired without this design… In any market, there are segments where customers are willing to pay more for additional product features, allowing companies to implement focused differentiation strategies that serve an elite customer base. As a side effect, these industries have seen substantial increases in competitive products. Differential pricing allows a company to set up different price points for different customers for the same product. For small companies, this can be great. This can then be communicated in their marketing and sales strategy, for instance when talking to … A company attempts to make its strategy a sustained competitive advantage. There are three types of product differentiation. In a 1997 Harvard Business Review article, ‘Discovering New Points of Differentiation,’ Rita Gunther McGrath and Ian MacMillan wrote: “[Product differentiation is] offering customers something they value that competitors don’t have.”, According to MarketResearh.com: “Differentiation allows you to provide superior value to customers at an affordable price, creating a win-win scenario that can boost the overall profitability and viability of your business.”. A major aspect of a product differentiation strategy comes from product design. Apple has made product design a hallmark of its differentiation strategy since the company's origins. Let’s look at a few. Louis Vuitton is a good example of a company that has followed a Differentiation Strategy: They have differentiated almost all their products with their famous ” LV monogram”. 14 Examples of Service Differentiation posted by John Spacey , November 11, 2017 Service differentiation is the design and delivery of a service to have unique and valuable characteristics relative to other services in the market. It includes actual physical and perceived differences, of which the latter can be acquired through advertising. Define unique selling proposition: Product differentiation allows companies to narrow down what it is that makes their products superior to the competition. One approach that is common in product differentiation is to use packaging that is perceived as being more user friendly. Where as a company focused on being a low-cost competitor will gravitate towards #3, Production Efficiency. In this context, ‘marketplace’ means the same as ‘market’ in its abstract sense. Differential pricing allows a company to set up different price points for different customers for the same product. Product differentiation is the process of distinguishing a product or service from others. For example, a small bookstore may offer discounts to teachers, students, librarians or members of a literary society. Though differential pricing is more common in the service sector, some manufacturers of goods also use differential pricing based on customer preferences, available discounts and selling strategies. Some people simply say ‘differentiation‘ with the meaning ‘product differentiation.’. If you want to learn more about product differentiation strategies and join a community of … Humboldt University Berlin: Individual Price Discriminaton – An impossibility? Small-business owners can also offer discounts to members of specific groups. Customer Segmentation for the Hotel Industry, Harvard Law School: Chapter 6: Differential Pricing, Legal Planet: The Insurance Industry Helps Us to Adapt to Climate Change, CNN: Web Sites Change Prices Based on Customers' Habits, Federal Trade Commission: Price Discrimination Among Buyers: Robinson-Patman Violations; July 2008. Before starting his writing career, Gerald was a web programmer and database developer for 12 years. It can be useful because they then have a chance to compete against bigger companies. Your company is a well oiled machine more sophisticated markets from those offered by competition... Reduced-Price tickets for matinee screenings in an attempt to bring in more revenue in a single while... Granting volume discounts allow the Business to bring in more moviegoers during hours... A person can decide whether to get a branded medication or a generic Wireless! – quality peak demand periods for Your own rafting tour provides just the level. 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