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Differentiated Products: Definition & Examples

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  • 0:01 Differentiated Products
  • 0:40 Examples
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Lesson Transcript
Instructor: Susan Fenner

Susan has an MBA in Management from the University of North Alabama. She teaches online and campus-based Business courses.

In this lesson, we'll be looking at differentiated products, which involves how companies show that their products are different and, therefore, superior to the competition. After learning about this marketing strategy, you can test your knowledge with a quiz.

Differentiated Products Defined

Product differentiation is a marketing strategy that focuses on showing off the differences between your product or business and the competition. When consumers have so many choices these days, why should they pick you over all the rest? If you can show the public what makes your product different, you have opened the door to showing them that your product is unique or better in some way. This differentiated product image can promote brand loyalty and allow you to create a competitive advantage over your competitors. This is important if you hope to gain and sustain a large share of the market.

Examples of Differentiation

There are many ways to differentiate your product. One common strategy is to focus attention on different physical characteristics. For example, a food product may claim that it tastes better or uses better quality ingredients. Personal grooming products, such as shampoo, may claim that they lather better or leave your hair feeling cleaner. You could even differentiate on the basis of size or quantity. The possibilities are endless!

Another way to differentiate your business or product is through location. If you can place your business or product in a location that is more convenient for your target customers, you can gain a competitive advantage. This is especially important when there is very little difference in the actual product or price. If all else is equal, customers will generally choose the most convenient location to make their purchase. An example of this strategy is McDonald's restaurants located inside Wal-Mart stores. When it comes to McDonald's, a hamburger is a hamburger is a hamburger! But if you have a Big Mac attack when you are shopping in Wal-Mart, the convenient McDonald's restaurant under the same roof has a competitive advantage over the one a mile down the road.

You can also differentiate your product on the basis of service or a warranty. If the competition offers a 90-day money back guarantee on their computers, you could extend your guarantee to six months or a year. Or, you might offer in-store repair service, rather than shipping the computer back to the manufacturer.

Some companies differentiate by supporting the environment, good health, or other social causes and charities. In 2013, a study was conducted of over 10,000 adults in 10 countries around the world. A whopping 91% of them stated that they would be willing to switch brands to one that supports a good cause, as long as the quality and price of the product were comparable. And, when Nielsen Global Research polled 29,000 people in 58 countries, 50% of them reported that they would pay more for a product if the company supported social causes.

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