Product Differentiation

Product differentiation in industrial organization refers to the strategies that companies use to make their products stand out from competitors’ offerings. This can involve unique features, branding, quality, or customer service. By distinguishing their products, firms aim to attract specific customer segments and create loyalty, often allowing them to charge higher prices. Differentiation can reduce direct competition by making products feel less interchangeable, giving consumers more choices and promoting innovation within industries. Ultimately, it plays a crucial role in shaping market dynamics and consumer behavior.