This involves detailing the characteristics that are valued by customers that make it unique. Product differentiation costs and global competition. Marketing strategies and their impact on marketing. Although some few studies have been done on the relationship between product differentiation strategies for competitive advantage, information on the strategies used in kenya is ostensibly missing in the literature. The economics literature has clearly recognized the benefits that product. Product differentiation examples of horizontal product differentiation. Product differentiation process of distinguishing a product from competitors. If there is an economic downturn, these companies seem to either get out just in time, or. Market segmentation, product differentiation, and marketing. A differentiation strategy involves the firm creating a productservice, which is considered unique in some aspect that the customer values because the customers needs are.
The concept was proposed by edward chamberlin in his 1933 the theory of monopolistic competition. Google scholar sage journals smith, wendell 1978, retrospective note on market segmentation, journal of marketing research, 15 august, 316. When developing your product differentiation plan, assess whether or not the following can be unique and whether or not that uniqueness is a competitive. Market segmentation, product differentiation, and marketing strategy. The business owner or marketing manager is usually held responsible for putting together a plan, but regular employees, such as a finance manager or an operations manager, can also provide valuable input for the plan to work. On television we see product differentiation all the time, whether the subject of the commercial is a distinguishable good like an automobile or an indistinguishable good like laundry detergent. Using a cluster analysis, the authors found that the premium price is significantly associated with product differentiation based on innovation and company type. Product differentiation, petroleum, effimax, profitability, industry. Marketing strategy can be viewed through the lenses of marketing mix and its four elements.
Marketing success through differentiationof anything. In its simplest terms, product differentiation is concerned with the bending of demand to the will of supply. Goods are different but at the same price some consumers will buy one and some will buy other, it. In an often crowded product market, customers crave product distinctions to help them make purchasing decisions. It is a process of continually and systematically assessing needs of the market and its different segments to support product development and innovation that caters for those needs in the most feasible and profitable. Product differentiation monopoly perfect competition. It doesnt make any difference whether they are a learning organization. It is concerned with subdividing a market and then forming a suitable marketing mix to reach the target market. Although product differentiation has helped large pharmaceutical companies to replenish their drying product pipeline, it has also immensely benefited drug delivery companies that were, till now, fringe players. Meeting expectations of a particular target market segmentation. Product differentiation and market segmentation as. Product differentiation the differences in the product may be of1.
The topic of this research work is product differentiation as a competitive tool in the marketing of soft drinks a case study of limca bottling company. Impact of product differentiation, marketing investments and brand equity on pricing strategies. By offering greater values, customization features and convenience options, you can influence a. Differentiation looks to make a product more attractive by. Product differentiation can take place in the form of physical or in the form of qualitative differences. Pdf impact of product differentiation, marketing investments and. The types of differentiation strategy marketing essay. Rebranding is a marketing strategy in which a new name, term, symbol, design, or combination thereof is created for an established brand with the intention of developing a new, differentiated identity in the minds of consumers, investors, competitors, and other stakeholders product differentiation strategy pdf.
A companys offer has to be distinct from those of its competitors and should fulfill the requirements of the customers of its target markets. Companies do this because they want to show customers their products attributes and uniqueness. It allows the seller to contrast its own product with competing products in the market and emphasize the. When utilized successfully, product differentiation creates a competitive advantage as customers view your product as superior. Moreover, this research attempts at providing empirical evidences to the importance of competitive advantage and product innovation in achieving superior marketing performance. The study suggests that brand equity, marketing investment and product differentiation are closely associated with price. Differences in functional features, materials, design example. A companys positioning is the result of whatever the company does. Marketing mix is the most tangible and the most flexible.
In economics and marketing, product differentiation or simply differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. Product differentiation is a tactic that companies use in marketing campaigns that to distinguish their product from another similar products in the market this strategy can focus on real product differences or simply preserved differences in the consumers min. Market segmentation, product differentiation, and marketing strategy 1. In each extreme of the beach, there is an icecream post. Pdf prior research explores the individual impact of brand equity and new product development on firms marketing performance but there is. Market segmentation and product differentiation bizfluent. This paper aims to show the effect of brand equity, marketing investment and product differentiation on price in small and medium enterprises smes, multinational companies mncs and retailers private labels.
Although the two posts sell exactly the same icecreams, consumers are not indifferent between. It doesnt matter whether they use onetoone marketing. Oct 12, 2019 product differentiation or just differentiation is a marketing process of differentiating an offering product or service from others in the market, to make it more appealing to the target audience. Product differentiation and positioning marketing management. Distinctive brand differentiation among competing brands in the market can be achieved by more innovative brands, which may help a firm maintain its. The overall goal of a product differentiation strategy is to make a. Strategy development report template for download and completion. Google scholar sage journals smith, wendell 1978, retrospective note on market segmentation, journal of. Product differentiation definition, types, importance. Impact of product differentiation, marketing investments. Product differentiation focuses on the elements of a product that makes it different from the competing brands.
Product differentiation and the strategic marketing process. Chapter one focuses on the introductory aspect of this work e. The pur pose of this work is to examine the impact of the market structure. Product differentiation is essential in todays financial climate. Impact of product differentiation, marketing investments and brand. In this article we will discuss about the sources and importance of product differentiation. Smith, wendell 1956, product differentiation and market segmentation as alternative marketing strategies, journal of marketing, 21 july, 3 8.
Product differentiation is a marketing process that showcases the differences between products. Product differentiation being the most commonly used one of these two strategic typologies spencer, joiner, and salmon, 2009. Product differentiation is the introduction of unique, distinctive characteristics or features to a product to ensure usp unique selling proposition of the product. If you continue browsing the site, you agree to the use of cookies on this website. Differentiation looks to make a product more attractive by contrasting its unique qualities with. Product differentiation is a process used by businesses to distinguish a product or service from other similar ones available in the market. Overview the product marketing strategy includes the development and differentiation of products. Introduction most companies use marketingperformance measures such as brand loyalty, market share, price premium and customer lifetime value, to determine their success or failure. Successful companies strive to distinguish their products from competitors through differentiation strategies. Product differentiation strategies and impact of factors influencing. Mar 18, 2011 methods of product differentiation slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The marketing mix, in its general form, includes decisions and activities of business firms in the areas of product policy, channel policy, promotional policy, and pricing policy.
Difference between market segmentation and product. 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. Product differentiation and marketing strategies are most often undertaken by. Industrial organizationmatilde machado product differentiation 4 4. Product differentiation and economic progress mises institute.
Product differentiation is the process of distinguishing a product or service from others. A product can be differentiated on the basis of its physical form, features and product quality, apart from its other attributes such as price. The physical form of the product includes its size and shape. Product differentiation is a marketing strategy whereby businesses attempt to make their product unique to stand out from competitors. New dosage forms, fixed drug combinations and new indications are the most exploited differentiation strategies.
Product differentiation is a marketing process in which a product is differentiated from others. International product differentiation through a country brand. Difference between market segmentation and product differentiation market segmentation is a market oriented strategy. A written marketing plan can function as a guide for you to follow in order to accomplish your goals for product marketing. Differences between strategies of differentiation and segmentation product differentiation and market segmentation are both consistent with the framework of imperfect competition. Impact of product differentiation, marketing investments and. The differentiation allows a company to achieve a competitive advantage. In order to get an advantage different from the competitor, the corporation provides a special and unique product line or marketing project, which brings the enterprise a differential advantage and makes people be willing to accept the higher price swink, harvey, 1998. Product differentiation strategies and impact of factors influencing the differentiation process a case study of the mobile telecom service industry of pakistan. Product differentiation is important in todays financial. Your ability to create a viable business growth strategy through differentiation is limited by the product itself. Academics have been researching brand equity, return on investment and effects of product differentiation for many years, but there has been little work that has taken a holistic. Product differentiation and market segmentation as alternative marketing strategies.
It involves defining the offerings unique position in the market by explaining the unique benefit it provides to the target group. Businesses do this to gain an edge in industries where. Differentiation advantage low price strategies high nonprice strategies market segmentation low mass market high many mark ets distinctive competences manufacturing and buying marketing. Pdf product differentiation and market segmentation as. Sep 19, 2019 product differentiation is a marketing process that showcases the differences between products.
Competitive advantage a competitive advantage is an attribute that allows a company to outperform its. Background product differentiation is a positioning strategy that many firms use to distinguish their products from those of competitors. Product differentiation marketing blog for students and. There are many ways that a product can differentiate itself, such as innovation, marketing and distribution. The goal of this tactic is to help businesses develop a competitive advantage and define compelling unique selling propositions usps that set their product apart from competitors. Product differentiation as a competitive tool in the.
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