A marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior.
Product
differentiation can be achieved in many ways. It may be as simple as
packaging the goods in a creative way, or as elaborate as incorporating new
functional features. Sometimes differentiation does not involve changing the
product at all, but creating a new advertising campaign or other sales
promotions instead.
Example: When buying a
personal computer, a typical consumer pays a $295 premium for an IBM, $232 more
for a Compaq, and $92 more for a Dell than for a similarly configured Gateway.
Zeos, NEC, Everex, and Packard Bell sell at a discount relative to Gateway.
Many experts believe that these differentials are larger than the measurable
differences in quality among the brands.