What is Product Differentiation?

Definition: Product differentiation is a tactic that companies use in marketing campaigns that to distinguish their product from another similar products in the market. This strategy can focus on real product differences or simply preserved differences in the consumers’ minds.

What Does Product Differentiation Mean?

What is the definition of product differentiation? This is a marketing process that highlights the unique features of a company’s products as compared with its revivals’. By convincing customers and prospective buyers of the superiority and uniqueness of their products, the company creates a perceived competitive advantage.

Making a product stand out against a similar competitor’s product is difficult for any company. Typically, this process starts with adding additional features to the product that competitor’s don’t have. For instance, a company might add new colors to the product or increase performance that other competitors don’t currently offer. It’s then the marketing department’s job to spread the word about these different features in hopes that consumers view this product as better than others on the market.

This marketing strategy can also take effect in the packaging process. The product can simply be attractively packaged to make opening and storing easier or simply colorful. Sometimes, the same product can be advertised differently to achieve the same objective.

Let’s take a look at an example.


The smartphones industry is one of the most competitive in recent times. The competition in Android phone market is extremely fierce because the functionality is so similar. Thus, companies have to upgrade the hardware to make their products unique and stand out.

Sony is credited for being the first company to make a water resistant Android smartphone. HTC also takes credit for making the first all metal body Android smartphone with front facing speakers. Samsung started making large screen android phones with stylus. Others like Nextbit and OnePlus are making flagships and selling them for far lesser than the market average prices. These are all features added to similar products in an effort to differentiate them from that of their competitors.

All these companies also market their products differently. Sony uses movies and the Champions League while HTC uses celebrity endorsements from movie stars. Some communicate a message of durability while others communicate a message of class and prestige. These are all attempts to gain competitive advantages through product differentiation.

Summary Definition

Define Product Differentiation: Differentiation means adding features or marketing products to separate them from competitor’s goods in the eyes of consumers.

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