Popular Terms
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 will repair the product at no expense or return 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.

Use 'differentiate' in a Sentence

Virgin Airlines flights differentiate themselves from the competition by offering full service at a low price.
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John built a new mousetrap. It differentiates itself from other mousetraps because it does not kill the mice it traps.
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The coffee at Coffee-to-Go is differentiated because it has the highest caffeine content in town.
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