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The core of differentiation lies under the fact where in the product needs to be differentiated from the competitors product. Differentiation helps in creating an edge over the competitors by offering something that the buyer values and is different from the rest. There are products that provide low degree of differentiation: venkys chicken, Bayer's aspirin and Tata steel. Then there are products that provide high degree of differentiation: automobiles, furniture's or commercial buildings; which includes better performance, better quality, better usage and price that can fit into the customers need. There can be a possibility wherein a premium price may be charged for a superior quality product. Differentiation can be enhanced by offering value added services and with the use of technology.

Differentiation can be done on the basis of:


Forms: Products can be differentiated in various sizes, shapes or physical structures of product.

Features: Various features supplementing their basic functions can be offered by many products. The company should keep in mind that how many people want that particular feature and whether the competitors can could easily copy it. Therefore each feature should be properly prioritize.

Customization: Type of product differentiation wherein a product is changed according to the specifications provided by the customer. Mass customization is to prepare on a mass basis individually designed products, services.

Reparability: is measure how easily a product can be repaired, in terms of time and money.

Durability: is a measure of the products expected life performing under natural and stress fullconditions. Inorder to make a different product from the competitors long lasting products should be made.

Style, branding, innovation, specification, image and patents.


Price - position. Price-value combination


Intensive distribution, exclusive distribution, back-up, service support


Apart from the above differentiations service differentiation plays a very important role in a products life. The competitive success can lie by providing value added service and improving their quality. The main service differentiation are:

Ordering ease:

It refers to how easily a product can be ordered. Many online services are provides for the easy placement of order, these include financial institutions for easy transactions.


It refers to how easily the product is delivered to the customer, including the handling, speed, time and care while carrying the product.


It refers to the proper installation of the product so that it becomes operational. Installations services are required basically for heavy equipments, complex products usually technology driven.


This strategy was given by Michael Porter. In this strategy the firm aims at lowering the price of the product to become the leader in the targeted market .their main objective is to bring down the cost at its minimum and this can be achieved by working hard on the distribution and production cost so as to gain a higher profit margin. Their main concept is to attract more number of customers with the low cost and and gain a high share in the market. This strategy is most efficiently utilised in large scale business wherein high level of differentiation is not possible. The firms engaged in cost leadership strategy either sell their product at average industry price or below the average industry price in doing so the firms earns the higher profit than its rivals in the former case and in the later maintain the same profitability where as the rivals fails. Mainly it is targeted for the broad market segment.

Cost can be minimised by making the optimal utilisation of resources, by improving the process efficiency and by altogether minimising the cost of the product.

The problems faced by cost leadership strategy are:

Firstly as the main objective of cost leadership strategy is to minimise the cost now if the cost is minimise surely the quality of the product will not be up to the level. Thus it is difficult to maintain the quality level of the product.

Secondly there are customers who are ready or say prepared to pay more for a strong brand image and added value.

The main focus of cost leadership strategy is to lower the product cost .This strategy does not deal about the total cost of purchase to the customer, after sales cost, change cost and also the usage cost.

Often leader becomes resistant to change so faces the problem like if a product is in need of new technology advances surely it will charge extra for the product and in that case if the price is kept low .the firm will surely suffer a loss.


The differentiated focus strategy focuses on one or more small market segments. The process of differentiation is applied to the product according to the needs of the customers of the particular segment which is under consideration. The competitors may be targeting broader customer market and thus the firm's gets an opportunity to differentiate its product within a small segment and provide variant product from its competitors. The fact that every customers need is different becomes the basis for this strategy to be applied.

Example: airline


The cost focus strategy emphasises on lowering the cost of the product within one or more narrow market segments. The application of the strategy includes understanding the market segment more deeply and thus deciding the cost strategy. The firm tries to attract the customers of a particular segment by providing a similar high priced product at a lower price, satisfying a sufficient number of customers