Product Differentiation 1.1.3

Product differentiation - arises when customers perceive a distinct difference between your product and the alternatives provided by competitors. Where products has a value proposition that is sustainably different from the competition.

Effective differentiation allows a business to:
- Compete effectively (a source of competitive advantage and ideally hard to copy)
- Protect and build a brand (build intangible value which will also strengthen customer loyalty)
-Add more value (strong differentiation should allow a higher price which means high profit margins)

Requirements of a product for effective product differentiation:
- capable of delivering what is important to customers
- distinctive  (compared with competition)
- not easily copied by competitors
- affordable for target customers
- profitable

A product that is effectively position is often said to have a unique selling point (USP).

USP - something that sets a product apart from its competitors in the eyes of customers both new and existing.