Product Differentiation

Physical products vary in their potential for differentiation. At one extreme we find products that allow little variation: chicken, steel, aspirin. Yet even here, some differentiation is possible: Starbucks brands its coffee, and P&G offers several brands of laundry detergent, each with a separate brand identity. At the other extreme are products that are capable of high differentiation, such as automobiles and furniture. Here the seller faces an abundance of design parameters, including:31

^ Form. Many products can be differentiated in form—the size, shape, or physical structure of a product. Consider the many possible forms taken by products such as aspirin. Although aspirin is essentially a commodity, it can be differentiated by dosage size, shape, coating, and action time.

^ Features. Features are the characteristics that supplement the product's basic function. Marketers start by asking recent buyers about additional features that would improve satisfaction, then determining which would be profitable to add, given the potential market, cost, and price.

^ Performance quality. Performance quality is the level at which the product's primary characteristics operate. The Strategic Planning Institute found a significantly positive correlation between relative product quality and return on investment. Yet there are diminishing returns to higher performance quality, so marketers must choose a level suited to the target market and rivals' performance levels.

^ Conformance quality. Buyers expect products to have a high conformance quality, which is the degree to which all of the produced units are identical and meet the promised specifications. The problem with low conformance quality is that the product will disappoint some buyers.

^ Durability. Durability, a measure of the product's expected operating life under natural or stressful conditions, is important for products such as vehicles and kitchen appliances. However, the extra price must not be excessive, and the product must not be subject to rapid technological obsolescence.

^ Reliability. Buyers normally will pay a premium for high reliability, a measure of the probability that a product will not malfunction or fail within a specified time period. Maytag, which manufactures major home appliances, has an outstanding reputation for creating reliable appliances.

^ Repairability. Buyers prefer products that are easy to repair. Repairability is a measure of the ease of fixing a product when it malfunctions or fails. An automobile made with standard parts that are easily replaced has high repairability. Ideal repairability would exist if users could fix the product themselves with little cost or time.

^ Style. Style describes the product's look and feel to the buyer. Buyers are normally willing to pay a premium for products that are attractively styled. Aesthetics have played a key role in such brands as Absolut vodka, Apple computers, Montblanc pens, Godiva chocolate, and Harley-Davidson motorcycles.32 Style has the advantage of creating distinctiveness that is difficult to copy; however, strong style does not always mean high performance.

^ Design. As competition intensifies, design offers a potent way to differentiate and position a company's products and services.33 Design is the integrating force that incorporates all of the qualities just discussed; this means the designer has to figure out how much to invest in form, feature development, performance, conformance, durability, reliability, repairability, and style. To the company, a well-designed product is one that is easy to manufacture and distribute. To the customer, a well-designed product is one that is pleasant to look at and easy to open, install, use, repair, and dispose of. The designer has to take all of these factors into account.

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