Differentiated product

economic-dictionary

A differentiated product is one that has different attributes, but that satisfy the same need of the final consumer.

A differentiated product is a very simple concept to understand, but not easy to do. It is not only that the product is different from the others, but that it is different and more valued by consumers. Good because it provides them with more utility, more benefits or better meets the need they intend to satisfy.

Attributes of the differentiated product

If the attributes of the object are relatively contrasting, then consumers are willing to pay a significantly different price in exchange for that important variant.

The application of a marketing strategy achieves a differentiation in the product, since it achieves that the consumer has a different perception with respect to a product of the same category.

A relevant element when making purchasing decisions of a product, of this type, is that the attributes can be recognized and valued by the consumer, either for their tangible or even intangible characteristics.

Uses of the differentiated product

Companies need to know the needs of their customers and develop products or services that have attributes that make them unique, because it distances them from the competition; which causes the possibility of generating brand loyalty in the consumer, thus giving them the opportunity to stay in the market and even win more market. This applies as a "Ocean blue strategy"

That is why part of the efforts of companies are focused on locating the internal and external factors that can condition the differentiation of their product.

It is because of the above that; the differentiation of a product can be considered as a competitive strategy. For example, some companies may flood the market with products that contain small differences, in order to prevent other companies from entering to compete, that is, they fill the spaces that other companies could use; thus achieving a barrier to entry that is not based on quality standards or price reduction, so they cannot be accused of "Antidumping", thus winning the market.

What does product differentiation depend on?

The existence of a significant number of differentiated products depends on the size of the market. That is, if there is a small number of consumers, then the number of products with small variants that are produced and sold profitably is limited; while a significantly high number of consumers will reflect greater opportunities to be bought, therefore, producers will increase their offer.

International trade, for example, implies a larger market size for differentiated products, since the possibilities of consumption are increased.

The most important attributes that make a difference

Among the characteristics or attributes that allow a product to differentiate itself from its competition:

  • Exceed customer expectations through higher quality,
  • Implementation of services associated with the product, for example, satisfaction guarantees, after-sales services, home delivery, etc.
  • Product innovation, that is, characteristics that improve the product itself.
  • Use of exclusivity, either for its unique or personalized design.
  • Adequate management of resources to be friendly to the environment.
  • Representativeness in countries where this type of product does not exist.
  • Adjusting to the new generational trends in the market.
  • Closeness in location.
  • Market experience.
  • Immediate delivery, among others.

It is because of that; Given the changes in the market due to the preferences and needs of consumers, it is necessary for companies to constantly adapt to these changes and achieve a good response capacity in order to win the market.

Tags:  banking comparisons Colombia 

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