- MemberNovember 23, 2021 at 11:05 pm
Product differentiation helps organizations create products or services that stand out from their competitors. Increased competition among industries has divided demand among many players, making it important for a business to convince their customers why their products and services are better.
Horizontal differentiation refers to making distinctions in products when they can’t be differentiated in terms of quality or price point since their popularity has more to do with the customer’s personal taste.
An example would be, as we know in the market there is a variety of sports shoes manufacturer Nike, Adidas, Puma, Reebok etc. In regards to pricing, they are all almost alike, but moving away from the objective method of choosing a product. I would go with Nike since I have psychologically associated myself with the brand from the advertisement and culture is has breed.
A brand that has excel well in this style of differentiation is Coke. Compared to Pepsi, Coke has associated itself with many events, celebrities, movies and social media. When you find any Coke product, you will first notice the different packaging used for its different brands. Coca-Cola differentiates its drinks from those of Pepsi through its packaging. We associate the classic Coke with the red color.
In addition to the packaging, Coca-Cola ensures that consumers can get these different brands in different quantities. The glass bottle is available in 0.25, 0.5, and 1 litre; the plastic bottles are available in 0.5, 1, 1.5, and 2 litres; and the cans can be bought in either 0.25 or 0.33 litres. It ensures that the packaging materials are recyclable and environment-friendly. In this way, Coca-Cola has differentiated its drinks from that of Pepsi to ensure it serves the needs of its consumers.
Vertical differentiation refers to the distinctions in products that can be evaluated based on quality. Products in this type of differentiation are also dependent on price.
An example on this would be the type of earphones offered in the market. Earphones can have a price range form RM 900 to RM 4000. A pair of Jabra Elite 85h cost around RM 952 and a Bang and Olufsen Beoplay H95 cost around RM 4056. If we look at the comparison on the product, between the two pairs, Bang and Olufsen has a longer battery life of 50hours compared to the Jabra earphones. The warranty period for Bang and Olufsen is 3 years compared to 2 years for Jabra. Hence, picking a product with the better quality of service ie warranty and overall quality would be a better pick.
Mixed differentiation is a combination of horizontal and vertical.
An example of this would be my choice of laptop. Although a MacBook Pro would cost a lot more compared to the other brand. I would personally get a MacBook Pro for how the design appeal to me and also the quality of its built and design. Its Operating System is different compared to Microsoft Operating System; hence user experience is different compared to the other laptop not produced by Apple.