Question

4. (0,.7 or 10) Provide an example of product differentiation using any industry you want (e.g., fast food, shoes, clothing etc.)

Answer 1

Product differentiation is a marketing process in which a product is differentiated from others. Put simply; it is the process of distinguishing a good or service from others, i.e., making it stand out. Companies do this because they want to show customers their product’s attributes and uniqueness. This may include products within the company or of the same line.

Product differentiation types

There are three types of product differentiation.

Vertical differentiation

Vertical differentiation exists when consumers compare a product according to one feature – quality.

Consumers can say “Product A is better than Product B.”

For example, in the pharmaceutical industry, a person can decide whether to get a branded medication or a generic. They know the quality of each one.

A feature that also differentiates the two medications is ‘price.’ Brand names are much more expensive than generic medications.

Horizontal differentiation

With horizontal differentiation, the product is harder to classify because it has many features. Therefore, we only consider one characteristic.

Consumers are not certain about the quality of the products that they compare.

For example, when considering drinks, consumers may choose one because of its taste. However, they cannot determine which one is superior in quality.

When we choose between a Coke, Pepsi, or Dr. Pepper, for example, taste drives our decision. Regarding their quality, we have no idea which one is best

Mixed differentiation

Mixed differentiation is a combination of both vertical and horizontal differentiation. It is common when consumers consider more complex products or marketing executives are looking at more sophisticated markets.

LUSH

Top Competition: Sephora, BOMB Cosmetics, Etsy

Lush is unlike any other makeup brand on the marketplace. This cosmetics maker has international reach with a local "warm and fuzzy" approach that isn't afraid to push the boundaries.

So, what makes LUSH so different from the likes of Sephora or even Etsy? Handmade products. Advocates of LUSH are committed to ethical buying, and are obsessed with the purity that comes from a handmade item. The company's biggest success is knowing that its core buyers value social and corporate responsibility over a luxurious and out-of-reach image.

LUSH's branding is simple and genuine, with great contrast between visuals that is simply not seen elsewhere. For that reason, the company has a massive brand-loyal following.

How they're doing it:

• Understands its customers -- appeals to the girl who's "had enough"and believes in what they believe
• Selfless with its products -- offers free samples and in-store trials on nearly everything
• Not selling an image -- the business is selling a viewpoint on how to define "beauty"
• Offers a one-of-a-kind retail experience like you're walking into an Etsy store in real life