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Marketing or product differentiation is the process of describing the differences between products or services, or the resulting list of differences. This is done in order to demonstrate the unique aspects of a firm's product and create a sense of value .
Examples are Cournot oligopoly, and Bertrand oligopoly for differentiated products. Bain's (1956) original concern with market concentration was based on an intuitive relationship between high concentration and collusion which led to Bain's finding that firms in concentrated markets should be earning supra-competitive profits.
Product differentiation allows for a firm to establish its products from its competitors to win over a greater market share. The more different the products of rival firms are, the lower the cross effects between their markets with regards to both non-price and price variables. [6]
Differentiation drives profitability when the added price of the product outweighs the added expense to acquire the product or service but is ineffective when its uniqueness is easily replicated by its competitors. [6] Successful brand management also results in perceived uniqueness even when the physical product is the same as competitors.
Homogenous or differentiated products. High barriers to entry. This includes, but is not limited to, 'technology challenges, government regulations, patents, start-up costs, or education and licensing requirements'. [26] Interaction/strategic behaviour. It is salient to note that only a few firms make up the market share.
At the same time, businesses could work on the negative aspects or even further enhance the positive features of the particular product in order to achieve differentiation, and to take advantage from it. Therefore, finding a balance between point of difference and point of parity is a critical factor for businesses to succeed. [5]
1. There are many buyers and sellers in the market, and there is no fixed buying and selling relationship between them. 2. The products or services traded in the market are all the same without any difference. 3. There are no barriers to entry and exit from the market. 4. There are no trade secrets. 5. Capital resources and labour are easily ...
A ‘Product’ is "something or anything that can be offered to the customers for attention, acquisition, or consumption and satisfies some want or need." (Riaz & Tanveer (n.d); Goi (2011) and Muala & Qurneh (2012)). The product is the primary means of demonstrating how a company differentiates itself from competitive market offerings.