Hotelling's principle of minimum differentiation

Hotelling's principle of minimum differentiation suggests that businesses in a competitive market will often choose to position themselves very close to one another—rather than being diverse in offerings—to attract the maximum number of customers. For example, two ice cream vendors might set up their shops right next to each other instead of spreading out, as customers often prefer the convenience of having options nearby. This strategy minimizes the chances of losing customers to competitors by making it easier for them to choose between similar offerings in a familiar location.