In 1933, Edward Hastings Chamberlain an American economist published the Theory of Monopolistic Competition, in which he sets the ground for the term product differentiation.

He considers product differentiation as the process of distinguishing a product or service from others, to make it more attractive to a particular target market. The goal of including differentiation in a product strategy is to establish a position in the market which current and future customers will associate to being unique; thus, the company gains a competitive advantage.

The most common sources of differentiation are quality, design, functional features, sales activities (advertising), availability (timing, location).

Many product companies seem to disregard product differentiation, and sooner or later they start wondering why potential customers aren’t willing to pay for the products developed by the company.

In my perspective, a company needs to put enough effort in including product differentiation in the product strategy and revise it regularly. Otherwise, it will not survive on the mid to long term.

Now, if you take a closer look at the products developed by your company, are you able to name their differentiation sources?