In marketing, product differentiation is the modification of a product to make it more attractive to the target market by differentiating it from competitors' products.

The changes are usually in minor; they can be merely a change in packaging or also include a change in advertising theme. The physical product need not change, but it could.

The objective of this strategy is to develop a position that potential customers will see as unique. If your target market sees your product as different from the competition's, you will have more flexibility in developing your marketing mix. A successful product differentiation strategy will move your product from competing based primarily on price to competing on non-price factors (such as product characteristics, distribution strategy, or promotional variables).

The disadvantage of this repositioning is that it usually requires large advertising and production expenditures.

See also

• marketing,
• market segment
• product management
• brand
• marketing plan
• positioning