If there is an economic downturn, these companies seem to either get out just in time, or. Differentiation looks to make a product more attractive by. Pdf impact of product differentiation, marketing investments and. Meeting expectations of a particular target market segmentation. There are many ways that a product can differentiate itself, such as innovation, marketing and distribution. Product differentiation up to now we have assumed that goods, produced by different firms, are homogenous, that is perfect substitutes. Product differentiation and market segmentation as alternative marketing strategies. This involves detailing the characteristics that are valued by customers that make it unique.
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. In each extreme of the beach, there is an icecream post. A differentiation strategy involves the firm creating a product service, which is considered unique in some aspect that the customer values because the customers needs are satisfied. Every brand is built on a product i include services here as well. Overview the product marketing strategy includes the development and differentiation of products. 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. Product differentiation is the introduction of unique, distinctive characteristics or features to a product to ensure usp unique selling proposition of the product. The types of differentiation strategy marketing essay. Product differentiation and the strategic marketing process. Product differentiation strategies and impact of factors. Product differentiation definition, types, importance. This is done by firms to raise their market share of a product.
Pdf prior research explores the individual impact of brand equity and new product development on firms marketing performance but there is. Businesses do this to gain an edge in industries where. Marketing success through differentiationof anything. Product differentiation and market segmentation are two distinct, important marketing strategy concepts. The overall goal of a product differentiation strategy is to make a. 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. As a result, especially in the early stages of the brand building process where not enough emotional connections have been built, productbased. Profitability is operational defined as the increase in profit that is brought about by differentiated product or brought about as a result of product differentiation. 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.
Marketing strategy can be viewed through the lenses of marketing mix and its four elements. Market segmentation and product differentiation bizfluent. A written marketing plan can function as a guide for you to follow in order to accomplish your goals for product marketing. Now we will relax this assumption and allow firms to produce differentiated goods. It doesnt make any difference whether they are a learning organization. The way a company manages its marketing can become the most powerful form of differentiation. 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. Product differentiation is a marketing process that showcases the differences between products. Product differentiation process of distinguishing a product from competitors. Product differentiation is a marketing strategy whereby businesses attempt to make their product unique to stand out from competitors. 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. Industrial organizationmatilde machado product differentiation 4 4. Introduction most companies use marketingperformance measures such as brand loyalty, market share, price premium and customer lifetime value, to determine their success or failure. Market segmentation, product differentiation, and marketing strategy.
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. The concept was proposed by edward chamberlin in his 1933 the theory of monopolistic competition. Chapter one focuses on the introductory aspect of this work e. Product differentiation matilde machado industrial organizationmatilde machado product differentiation 2 4. Moreover, this research attempts at providing empirical evidences to the importance of competitive advantage and product innovation in achieving superior marketing performance. Product differentiation, competitive advantage, organizational. When utilized successfully, product differentiation creates a competitive advantage as customers view your product as superior. Product differentiation refers to the basic need to have productrelated qualities that set your brand apart from the competition. It involves defining the offerings unique position in the market by explaining the unique benefit it provides to the target group.
Pdf product differentiation and market segmentation as. Competitive advantage a competitive advantage is an attribute that allows a company to outperform its. Product differentiation being the most commonly used one of these two strategic typologies spencer, joiner, and salmon, 2009. Background product differentiation is a positioning strategy that many firms use to distinguish their products from those of competitors. Differences in functional features, materials, design example.
Once that is achieved, design can be a powerful marketing asset for. Product differentiation, petroleum, effimax, profitability, industry. Product differentiation or just differentiation is a marketing process of differentiating an offering product or service from others in the market. Product differentiation as a competitive tool in the. A product can be differentiated on the basis of its physical form, features and product quality, apart from its other attributes such as price. Market segmentation is the breakdown of a large target audience into smaller, more homogenous groups of customers. Impact of product differentiation, marketing investments and brand equity on pricing strategies. Product differentiation strategies and impact of factors influencing the differentiation process a case study of the mobile telecom service industry of pakistan.
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. Goods are different but at the same price some consumers will buy one and some will buy other, it. Product differentiation is the process of distinguishing a product or service from others. Businesses do this to gain an edge in industries where multiple competitors produce similar products. 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. The physical form of the product includes its size and shape. 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. A differentiated marketing strategy is an approach to target marketing where a company markets to multiple market segments using distinct market mixes for each one. Impact of product differentiation, marketing investments and brand. There is a negative interaction between brand equity and marketing investment such that lowerquality brands generate a lower price performance than.
Product differentiation the differences in the product may be of1. When developing your product differentiation plan, assess whether or not the following can be unique and whether or not that uniqueness is a competitive. Product differentiation in quality, packaging, design, color, and style has an important impact on consumer choice. Marketing mix is the most tangible and the most flexible. Indeed, that may be how some companies in the same industry differ most from one another. 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. A brand level investigation article pdf available in european journal of marketing 4956. Marketing strategies and their impact on marketing. This important study shows that an understanding of product differentiation is crucial to understanding how modern market economies function and that differentiated markets can be analyzed using discrete choice models of consumer behavior. 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.
The differentiation allows a company to achieve a competitive advantage. This is one of three approaches and is common when a company believes it has unique benefits that would appeal to different markets. Market segmentation, product differentiation, and marketing strategy 1. Google scholar sage journals smith, wendell 1978, retrospective note on market segmentation, journal of. Product differentiation focuses on the elements of a product that makes it different from the competing brands. 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. Lack of homogeneity on the demand side may be based upon different cus toms, desire for variety, or desire for ex clusiveness or may arise from basic dif ferences in user needs. This involves differentiating it from competitors products as well as a firms own products. Differentiation advantage low price strategies high nonprice strategies market segmentation low mass market high many mark ets distinctive competences manufacturing and buying marketing. A companys positioning is the result of whatever the company does. This differentiation strategy involves using the characteristics of the product you market to differentiate from your competitors.
Product differentiation monopoly perfect competition. 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. It doesnt matter whether they use onetoone marketing. Product differentiation is a marketing strategy that strives to distinguish a companys products or services from the competition. A companys offer has to be distinct from those of its competitors and should fulfill the requirements of the customers of its target markets. Differentiation is operationally defined as the rate at which new products with unique features are introduced into the market. Discrete choice theory of product differentiation the. Product differentiation examples of horizontal product differentiation. Product differentiation can take place in the form of physical or in the form of qualitative differences. Impact of product differentiation, marketing investments.