Product Differentiation Definition

Product differentiation is an important aspect of marketing. The primary goal is to convey the unique qualities of your product or service when compared to your competitors. Product differentiation is particularly important for crowded industries. It is best practice for businesses to develop new products or services with this in mind.

Product Differentiation Example

Imagine this common scenario: a business sells a product which they know is superior to a similar product being offered by their primary competitor. However, the competitor—despite having the lesser product—is more successful. After eliminating other factors, such as pricing, audience selection, and so on, the company decides that they need to communicate to their target audience why their product is better. By focusing on showing prospective buyers the unique qualities that makes their product better, the company might be able to close the gap.

Product differentiation is important for online marketers as well, who have ample opportunity to showcase how a product is unique on their website, advertising creatives, email marketing campaigns, and social media profiles. These channels provide a unique benefit to businesses who want a more long-form way to get their point across, since leads can be nurtured to a far greater degree than traditional advertising (e.g., a radio ad) would allow.

Why is Product Differentiation Important in Strategic Marketing?

Closing Sales

When prospects discover the unique properties of a product or service, they may discover the information they need to usher them through the buying cycle and convert into a sale.

Continuous Improvement

Product differentiation plays a role in continuous improvement because it offers a powerful way to make a product stand out, oftentimes in a manner appropriate for niche marketing.