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Product Differentiation and Its Benefits for Business

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Product differentiation or product differentiation is a strategy that is often used by businesses to differentiate their products from competitors' products.

Not only can it help businesses to differentiate products, it turns out that product differentiation also has other benefits that can benefit businesses. Read more about the meaning and benefits of product differentiation below!

What is Product Differentiation?

Product differentiation is a strategy a business devises to make its product or service stand out to the target audience. Simply put, product differentiation is a strategy to differentiate products from competitors.

When applying product differentiation, business owners need to identify and communicate the unique qualities (unique selling proposition) of their products. At the same time, business owners also need to make a clear distinction between their products and competitors' products.

The goal of product differentiation is simple: to develop a strong value proposition for your product or service so that it can attract the appropriate target audience.

Why is Product Differentiation Important for Business?

Intense business competition makes market players have to try harder to reach their target audience. For that reason, product differentiation is very important because it can enable a business to gain a competitive advantage or make a product superior in the market. In other words, business owners will not only stand out from their competitors, but will also be superior to their competitors.

Besides being able to make the product survive in the market, product differentiation is also important because it can:

  • Highlight product features and benefits
  • Answer big customer questions about the benefits they can get
  • Provide reasons for customers to buy products and make repeat purchases
  • Increase product value
  • Increase brand loyalty and build brand equity

Benefits of Product Differentiation

The main benefit of product differentiation is to help business owners to be able to highlight their products so they can compete with competitors. Not only can it help businesses to differentiate products, in fact there are many other benefits of product differentiation. For more, see the following benefits of product differentiation!

1. Increase brand value

The first benefit of product differentiation is to increase brand value in business. Product differentiation can not only be used by businesses so that their products can be glimpsed by new consumers, but can also add value so that consumers feel that their purchasing decisions are more meaningful.

For example, The Body Shop's brand value is their branding campaign that refuses to test products on animals. With these brand values, The Body Shop's consumers may feel proud of themselves because by buying products, they are participating in supporting sustainable beauty.

2. Increase brand loyalty

The exclusive value of the product can increase brand loyalty. For example, a clothing brand sells pants that can make your legs look slimmer. This aspect is the product differentiation strategy.

When the customer matches the pants, of course he will not turn to another brand because the customer already matches the product offered.

3. Narrow down the target audience

Product differentiation can also help narrow the target audience. The more research you do to look for product differentiators, the more businesses will understand who can actually buy a product or service. In the end, this can streamline the target audience.

4. No need to lower the price

Beating competitors through low prices is certainly commonplace. As an alternative strategy, business owners can sell the uniqueness of their products. That way, business owners don't need to lower product prices.

5. Increase sales and operating profit

Product differentiation can also increase sales and operating profit. With product differentiation, business owners do not need to lower the price of their products. If the price does not change, the profit will be maximized. Discount strategies or other promos can also be secondary.

That is information about the importance of product differentiation and its benefits. Product differentiation or product differentiation is a strategy that is often used by businesses to differentiate their products from competitors' products. Not only can it help businesses to differentiate products, product differentiation also has other benefits, such as increasing brand value and brand loyalty.

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