To separate, or distinguish oneself or products from competitors. In business
, to differentiate a product
means that it has an attribute
that individualizes it.
When companies develop new products, one of the most important things they ask is, "How is this product different from other products?" Closely related to that question is, "What is this product's competitive advantage?" A product's difference from another product must be its advantage, or it will not succeed.
There are several ways to differentiate a product.
One way is to offer
a physical characteristic
. Shampoos, for example, are differentiated by their smell. Retailers may differentiate themselves with their location
. This is important because retailers offer the same products inside, so their product is the convenience they offer to customers. Wal-Mart
, for example, positions their stores
only on major streets. Offering a warranty
is another way to differentiate a product, by offering the trust
that the product will work
for at least as long as the warranty. If it doesn't, the company
the product at no expense
the customer's money
. Calphalon's non-stick pans come with a lifetime warranty. One only has to return with the pan to any retailer
and it will be exchanged with no questions. Finally, some companies differentiate themselves by offering goodwill
to the community
, through charity events
, social causes, or partnering
with a non-profit company. Many customers prefer to shop
with a company that shows it is socially responsible. Starbucks, for example, only buys coffee beans from sustainable growers. In addition
, they support their employees with generous benefits.