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5 Reasons Why Product Differentiation is so Important Today

Product differentiation is a frequently used term in marketing. You might often wonder what it means. In simple words it refers to the different aspects in which a product might stand out amongst its competitors, in the market. As Investopedia points out, “successful product differentiation involves identifying and communicating the unique qualities of a product or company while highlighting the distinct differences between that product or company and its competitors.” There are different types of differentiation that can be achieved too. These are horizontal and vertical differentiation.

Nowadays, product differentiation is something that brands all around, strive to achieve, across product categories. Let’s discuss why product differentiation is so important today, and why brands should strive to achieve it across their products categories:

Crowded marketplace

One of the primary reasons that establishing product differentiation is important for brands today, is because of the marketplace. Over the years, the concept of the marketplace has expanded and so has the number of products available in the market. There are so many products available in the same category that there is hardly any difference left in most of the products available. Customers are now bombarded with ads, across all mediums. In order to stand out, and make a mark on the mind of the customer, product differentiation should be achieved. You need to justify to the consumer why they should pick your product, amongst a bundle of products that offer almost the same characteristics.

Non- price competition

Often when a customer is buying something, he looks at many attributes of the products available. Price, for a large number of the customer base comes secondary. When we keep the price aside, there are many, many attributes to a product, that might make it stand out in the market. Non-price competition is one of them, and it lets the brands compete in areas, other than the set prices.  Being the best PR agency in Delhi, we understand how important it is for brands to achieve product differentiation across their product categories.

Creating value

Another primary reason that product differentiation is important today is because it tends to give the customers multiple reasons so they choose the product over the competitors. The customers today have diverse and varied needs, and as mentioned before, price isn’t the primary basis of purchase for a large number of customers. Depending upon the customer’s needs, habits, the product category, and brand, the customer might have different reasons for purchasing something. Product differentiation helps in doing this. It helps to create a value of the product in the eyes of the consumer.

Brand loyalty

Brand loyalty is something that brands nowadays strive to achieve, all around. Brand loyalty is when a customer chooses a particular brand over its competitors over and over. When a customer is loyal, they also tend to hesitate to switch to another brand, easily. Product differentiation can infact, help brands to achieve this. If a product stands out in the eyes of the consumer, they might see it as irreplaceable. They are likely to hesitate to switch to the substitutes that are available.

Varied Prices

There are various factors that are determined when the pricing of a product or service is done. You might have observed that within the same category of products, the prices vary a lot. Especially for product categories like tech gadgets, home appliances, cosmetics, often prices vary a lot. With product differentiation brands can infact justify these varied prices. Customers are often willing to pay more for a product, if they consider it to be worth the higher price. So with product differentiation, if your product does do what it claims, and is beneficial to the customer, you can charge a higher price for it, as opposed to what the competitors are charging in the market.

Hence, in a crowded market place like today’s, product differentiation is very significant for a brand’s growth and expansion. It can help the organization to establish an image in the market, and stand out amongst the competitors. Trying to establish product differentiation often takes a lot of time for brands. But the returns on this investment can help the brand in many ways.