What is a Differentiation Strategy?

Differentiation is a strategy for showcasing unique attributes of a product or service to differentiate it from the other existing competing products or services in the market. It intends to convince the customer that a particular product is unique in its quality and features and is superior to other similar products. 

Product differentiation is done using various methods. That is, the perception of value can be created by various methods.  The change is often subjective, influencing the individual customer's perception about the product.

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Example of Differentiation

Say for example, company X and Company Y manufacture similar hand-soaps. Then X introduces a special ingredient in their hand-soap to make it different from the Y s. This ingredient can be anything that enhances the value of the product. They can use a specific fragrance or a bit more moisturizer. Alternatively, X can differentiate their same hand-soap even without introducing the new ingredient. They can simply change the packaging to improve the aesthetics. They can also use promotional campaigns to differentiate their products without altering anything in it.

Related Topics

• Competitive Strategies
• Functional Strategies
  
• Organizational Strategies
• Operational Strategy
• Contestable Market Theory
• Value Disciplines
• Porter's Generic Strategies
• Differentiation (Strategy)
• Commoditize
• Niche Market Strategy
• Long Tail
• Low-Cost Production
• Resource-Based View of the Firm
• Ansoff Matrix
• Customer-Centric Strategy
• Blue Ocean Strategy
• Overfished Ocean Strategy
• Hedgehog Concept (Strategy)
• Innovation Strategy
• Bleeding Edge
• Disintermediation (Strategy)
• Strategic Alliance
• Coopetition (Strategy)
• Loss Leader Strategy
• Lean Strategy
• Game Theory Perspectives