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     The product differentiation definition states that it is the process by which a product is distinguished from others, so that it appeals more to the target audience. Other than distinguishing the product from its competitors, this process should ensure the product is distinct from all other products the company offers.

     Product differentiation gives the product or service an edge over rival products. It highlights unique aspects of the products and also generates value for the product in the eyes of the buyer, which should be any manufacturer’s ultimate goal. When the buyer perceives, a difference is when he will remember the product and buy it, thereby resulting in higher sales for the company.

     Product Differentiation Strategy

     The challenge companies face in creating product differentiation is to come up with a strategy which not only creates value for buyers, but also makes it difficult for rival companies to emulate. Whatever the company does to achieve this can be termed as a product differentiation strategy.

     Product Features
     By modifying the basic objectives behind the product or service being sold, the manufacturer can differentiate the product from it’s competitors.

     Linking Functions
     A way for product differentiation is to link together two functions of the same firm. An example of this could be linking the sales function with the company’s service function.

     Timing
     While entering a new product in the market, it is crucial to do so at the right time to help create product differentiation and positioning at time of launch. The new entrant gets the first mover advantage when the new product comes in before any rival company comes up with a similar product.

     Location
     Another aspect which could assist in creating product differentiation is the location of the firm. The closer the firm is located to the target consumers, the more advantages it has over other competitors.

     Product Mix
     The total mix or variety of products sold by a firm can also be a reason for product differentiation. If a consumer is buying a laptop from a particular brand, he would be more inclined to purchase laptop accessories of the same brand, rather than going for than other brands. Also, consumers prefer buying a variety of goods from one particular location rather than going to different places. Thus, stores selling a variety of products under one roof are better off than stand alone stores.

     Links With Other Firms
     Product differentiation could also be a result of links between different firms, services or products. There is a link between mobile handset manufacturing companies and service providers or automobiles and insurance companies.

     Reputation
     A firm’s reputation and goodwill can be a vital factor when it comes to product differentiation. It takes time for the company to get to a position where it has built itself a wonderful reputation in public, but once there, there is no looking back. The best way a company can create an outstanding reputation is by providing consumers with top quality products or services, to give them a memorable experience.

     Product Customization
     Certain products are customized for selling consumers what they exactly want. A good example here would again be a laptop manufacturing company, which provides customized laptops for all it’s customers where they get to decide what they want in their laptops rather than going with whatever the company has to offer.

     Packaging and Advertising
     Product differentiation can sometimes be done without modifying or altering the product or its features. This can be done by adopting an attractive or unique packaging, or by opting for a unique advertising campaign which registers itself in minds of the customer.

     Distribution Channels
     There are few products which create a differentiation on basis of their distribution channel. An example here would be that of soft-drink manufacturers. They distribute drinks throughout the country through a chain of bottlers. The company sends the main ingredients of the drink to the bottlers, who then add carbonated water and pack the drink for eventual distribution.

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