Product Differentiation – By CAROL M. KOPP

What Is Product Differentiation?

Product differentiation is a marketing strategy that strives to distinguish a company’s products or services from the competition. Successful product differentiation involves identifying and communicating the unique qualities of a company’s offerings while highlighting the distinct differences between those offerings and others on the market. Product differentiation goes hand-in-hand with developing a strong value proposition to make a product or service attractive to a target market or audience.

If successful, product differentiation can create a competitive advantage for the product’s seller and ultimately build brand awareness. Examples of differentiated products might include the fastest high-speed internet service or the most gas-efficient electric vehicle on the market today.


  • Product differentiation focuses on the consumers’ attention on one or more key benefits of a brand that make it better than other choices.
  • Differentiation may be reflected in the name, packaging, and promotion of a product.
  • A product differentiation strategy should demonstrate that a product can do everything the competing choices can but has additional benefits no one else offers.

How Product Differentiation Works

Product differentiation is intended to prod the consumer into choosing one brand over another in a crowded field of competitors. It identifies the qualities that set one product apart from other similar products and uses those differences to drive consumer choice. Differentiation marketing can also involve focusing on a niche market. For example, a small company might find it challenging to compete with a much larger competitor in the same industry. As a result, the smaller company might highlight exceptional service or a money-back guarantee.

Promoting Product Differentiation

The references to these qualities are reflected in the product’s packaging and promotion, and often even in its name. The brand name Fancy Feast is intended to convey that this is a high-quality cat food that your pet will love, and the advertising reinforces that claim. The FreshPet brand highlights its use of natural ingredients. Hill’s Science Diet conveys the message that this cat food was developed by real experts.