Examples of Differentiation in Marketing. Your business has only two departments: marketing and innovation. By using our services, you agree to, Copyright 2002-2021 Simplicable. And if there's time, I cuddle my cat.. productmint.com provides tailored content on all things business and tech. What students produce is a demonstration of what they have learned, also known as an assessment. The Peloton Business Model – How Does Peloton Work & Make Money? 2. 2. For example, you can justify a higher price if customers recognize that your product offers unsurpassed quality. Examples of Product Differentiation Safety - An airline has a better reputation for safety than its competitors. The different factors on which the process is implemented include: Now, what does this look like in action? 1. Apple Macbook Pro. This is how a luxury brand like Ferrari can command a top asking price for their cars. T-Mobile is a cellular company that's shedding … A differentiated product is unique by itself. Part of the answer lies in the topic we are going to cover in this article: product differentiation. customer care or repair programs), Product experience (e.g. It is process of distinguish a product or services from similar offerings in the market. An example of product differentiation is with the series of Apple products such as the I Phone, Mac Air laptop, and the I Pad. Oftentimes, users can expect to receive compensation for their claims within a matter of hours. Apple is a multinational technology company (you may have heard of them ;)) that produces super popular products like the iPhone and MacBook Pro laptops. What do they want? If your product differentiation advantage lies within one or few features, competitors catching up is just a few sprint iterations away. Quality: How does the quality, reliability, and ruggedness of your product compare to others on the market? Examples include Coca Cola vs. Pepsi or Pampers vs. Huggies. A product will become differentiated from that of the competitors if its form (size, shape, or … Focusing on your customers is a good start to successful product differentiation. The differentiation strategy of product leaders is to deliver superior value through leading-edge products that enhance customer benefits. BusinessProductPrivacy PolicyTerms of Service, Factors Influencing Product Differentiation. Product differentiation is a product's unique value on the market. Lists of business strategies and tactics. An example of Spatial Differentiation is a firm locally sourcing inputs and producing there product. Some of the most prominent examples include Apple’s iPhone, Sony’s PlayStation, or Toyota’s Corolla car.eval(ez_write_tag([[300,250],'productmint_com-banner-1','ezslot_5',173,'0','0'])); Let’s look at some recent examples in the section below. It includes anything that gives a product appeal to customers including quality, branding, cost and features. Quality. Horizontally differentiated products provide the same offering, both in terms of quality and price. Charging higher price points: A differentiated product experience allows customers to charge a higher price for their offerings. Successful product differentiation creates competitive advantages, including a heightened awareness of the product and brand, the ability to charge higher prices, and target customers more effectively. Factors include: There are countless instances in business history where companies successfully differentiated themselves from the competition. Explain and give an example of these terms in your own words. It resonates with a certain group of people who then become devoted custome… Lemonade Insurance provides customers with renters, homeowners, and pet insurance policies. Now that we’ve looked at the categories of product differentiation, let’s look at the specific factors that can differentiate products. Shiny object syndrome: People always want the latest and best-looking tech, either due to a fascination towards the product category or simply because of social pressure. Taking a look at Apple’s launch of the iPhone 11 shows the company’s willingness to target a different set of consumers for the same product category. Furthermore, the company donates any claim surplus to a charity of the user’s choice, which reduces the instances of insurance fraud. Product differentiation means that some feature, physical attribute, or substantive difference exists between a product and all other alternatives. Differentiation strategies can be used in a variety of industries and business types. The increased competition has divided the demand among different players in the market. There are primarily 6 ways to differentiate, These include: 1. Here’s a few examples of ways companies can differentiate their products from others in the market. By day, I lead a tech team of 10 folks for an e-commerce startup. Here are a few product differentiation examples of businesses that have made the strategy work for them. T-Mobile. Edward Chamberlin originally coined this concept in The Theory of Monopolistic Competition.Simply put, it refers … 1. The company headquarters is in Cupertino, California, CEO and co-founder is Steve Jobs and the company boasts of 284 retail locations spanning 10 different countries. This is done by firms to raise their market share of a product. A product can be differentiated based on its form, shape, quality, durability, reliability, repairability, style, design, or some other features of the product. Beardbrand positions their products with a specific product ethos. With horizontal differentiation… 1021 Words 5 Pages. A product can be differentiated based on the form of the product. Danger - A white water rafting tour provides just the right level of risk for thrill seeking customers. The superior quality allows them to charge above-average prices for their courses. Zoom. The physical structure, size … Differentiation strategy examples: Happy Socks The company created high-quality socks with gorgeous and unique designs, and put them in beautiful distinctive boxes. All rights reserved. It mentions its philosophy as well as the difference between Beardbrand and similar competitors. Top Competition: AT&T, Verizon Wireless. The winning entry would be the template for a new limited edition Starbucks cup. There's a retro mystique about Airstream's RVs. 3. Examples Of Product Differentiation. Assessing such an opportunity is therefore tied to the Total Addressable (TAM) as well as Total Obtainable Market (TOM). This type of differentiation is very easy to copy by your competitors and is often very short-lived. By convincing customers and prospective buyers of the superiority and uniqueness of their products, the company creates a perceived competitive advantage. How to leverage psychology to innovate, influence, motivate and sell. Just take a look at how much you’d pay for H&M and Nike socks, respectively. If you look at a particular section, such as coffee, you'll see that each product stands out in some way such as branding, organic … Report violations, 7 Examples of Sustainable Competitive Advantage, How to Build a Brand You Can Be Proud Of ». Other competing platforms, like Udemy or Coursera, rely on ‘everyday’ individuals and academic scholars to create educational content. Examples of Product Differentiation. The Klarna Business Model – How Does Klarna Work & Make Money? Chapter 6: Imperfect competition and international trade. Cookies help us deliver our services. For example, if you are in the growth phase, you should increase the number of different versions you have in a product line to more closely target different markets. Product differentiation can be achieved in a multitude of ways. When users file a claim, smart AI programs will assess the claim first. The product, price and promotion portions of the marketing mix indicate what your best options are for product differentiation. In fact, they created such a great product that people started buying socks as a gift to their family and friends. Customer experience is how your customers think and feel about your brand. Vertical differentiation exists when consumers compare a product according to one feature – quality. Here are 9 famous brands that have honed in on their differentiation and succeeded as a result: Lush Differentiator: bringing a natural beauty brand to the makeup industry as an authentic alternative to traditional products. ETSY. This can then be communicated in their marketing and sales strategy, for instance when talking to customers or creating marketing campaigns. What is product differentiation? Establishing a differentiated product experience oftentimes yields a multitude of benefits. First coined by Harvard economist Edward Chamberlin in his 1933 publication The Theory of Monopolistic Competition, product differentiation deals with the process of separating one’s products or services from the existing competition in the market. Product Differentiation – Creating a product with better features, performance or efficacy. Specify target audience: Knowing what it is that draws customers to a product allows businesses to specifically target customers that are attracted by these sets of features. Nowadays, Zoom is furthermore expanding into hardware products and networking which allows them to serve customers end-to-end.eval(ez_write_tag([[300,250],'productmint_com-large-leaderboard-2','ezslot_8',177,'0','0'])); MasterClass offers online video classes that are taught by top performers in their respective fields. A great example is the smartphone market, which offers products based on categories such as price, operating speed, design, or camera performance. Example: Apple — Differentiation Strategy Apple Inc. is an American corporation that designs and manufactures computer hardware, software and other consumer electronics. In recent times, Zoom has risen to worldwide prominence, becoming the poster child for the accelerated growth digital businesses experienced during the pandemic. Example classes include tennis lessons from Serena Williams or cooking lectures from Gordon Ramsey. Service Differentiation – This includes not only delivery and customer service, but all other supporting elements of a business such as training, installation, and ease of ordering. A way to think about differentiation is in terms of the crowded shelves of a supermarket. They know the quality of each one. Differentiation … Also, Disney’s operation in Orlando, Florida is another example of product differentiation according to location. Quality of service (e.g. The site arose from my fascination with how modern-day businesses utilize technology and product-led thinking to become dominant players in their industry. Conversely, where there is high reward, risk is not far around the corner. Zoom launched in 2011 and quickly took the video communications world by storm. At night, I work on expressing my weird thoughts through this blog. She claimed that she could taste the difference between a Coca Cola and Pepsi while being blindfolded. Oftentimes, customers assess those types of products by personal preferences. The company’s product is differentiated through a noble social mission, ease of use, transparency, and speed of delivery (i.e. Making a product stand out against a similar competitor’s product is difficult for any company. Product differentiation is what makes your product or service stand out to your target audience.It’s how you distinguish what you sell from what your competitors do, and it increases brand loyalty, sales, and growth.. Take, for instance, the case of Slack, which was just recently surpassed by Microsoft Teams in terms of user base. Think of the medical store that provides medicines 24 hours, 7 days a week. For example: 7-Eleven is a 24 hours convenience store providing fresh foods and beverages, also groceries and dine facilities. Hi folks, my name is Viktor! A large proportion of trade today takes place in highly differentiated products other than homogeneous products, especially in manufactured products. Indoor bike maker Peloton, for instance, knows that its customers are willing to pay higher prices, are fitness enthusiasts, and possibly don’t mind a digital experience. 1. Ask too low of a price, however, and customers may not see your product as truly valuable. This material may not be published, broadcast, rewritten or redistributed. Within vertical differentiation, products can be assessed on one factor. Product differentiation is a process used in marketingthat identifies and communicates the unique value a product or brand brings to the table when compared to competitors. There are 3 types of product differentiation: Horizontal differentiation – Difference in products that cannot be estimated in terms of quality. Online artisan store and shopping gallery, Etsy offers its users the chance to showcase their … If your differentiating factor lies within something that may become obsolete in the near feature, it is advisable to revamp the product or pivot into a new direction. Product Differentiation Examples. Race to the bottom: In a globally connected world, there will always be someone willing to offer cheaper prices (especially in the software world, where physical movements of goods is not a limiting factor). Differentiation strategy examples … Starbucks Another great example of user-generated content, Starbucks’ White Cup Contest launched in April 2014. This has made it very important for businesses to make their customers understand what different they have to Those that are relevant to Apple are product features, product mix, links with other firms, and reputation. The company’s superior product and low price point helped it to differentiate against legacy players such as Skype, Cisco, and others. All of these products are unique to what Apple’s competitors are selling which is why there is so much buzz around these products. This is a marketing process that highlights the unique features of a company’s products as compared with its revivals’. Product differentiation on MasterClass comes in the form of enhanced quality, both in the form of world-class instructors and high-end video production. Product differentiation can be categorized into three distinct themes, namely horizontal, vertical, and mixed differentiation. While some students may succeed with straightforward worksheets, others require a variety of assessment options. The Affirm Business Model – How Does Affirm Make Money? Let us take a look at some product differentiation examples. Consumers can say “Product A is better than Product B.” For example, in the pharmaceutical industry, a person can decide whether to get a branded medication or a generic. These characteristics allow them to find the right channels -to target consumers, such as YouTube ads on fitness-related videos. how fast the claims are handled). Or just ask Evan Spiegel what he thinks of Instagram’s blatant copy of its Story function. Here customers across the country were asked to doodle on their Starbucks cups and submit pictures as entries. Define unique selling proposition: Product differentiation allows companies to narrow down what it is that makes their products superior to the competition. The KAYAK Business Model – How Does KAYAK Make Money? This allows customers to easier recognize it, thus increasing awareness of the product (and consequently brand). Here’s how product differentiation can benefit a business.eval(ez_write_tag([[250,250],'productmint_com-medrectangle-4','ezslot_3',171,'0','0'])); Increased brand awareness: A differentiated product is, by definition, distinct from its competition. Clearly expressing your distinctive advantages is therefore essential. Hereby, products are differentiated based on a multitude of factors. Which begs the question: why do people perceive and rate comparable products that different? A product’s unique selling proposition (USP) can be literally anything that makes it unique or different from others out there. 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