1. Definition of 'Product Differentiation'
A marketing process that showcases the differences between products. Differentiation looks to
make a product more attractive by contrasting its unique qualities with other competing
products. Successful product differentiation creates a competitive advantage for the seller, as
customers view these products as unique or superior.
Investopedia explains 'Product Differentiation'
Product differentiation can be achieved in many ways. It may be as simple as packaging the
goods in a creative way, or as elaborate as incorporating new functional features. Sometimes
differentiation does not involve changing the product at all, but creating a new advertising
campaign or other sales promotions instead.
http://www.investopedia.com/terms/p/product_differentiation.asp
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. Marketing textbooks are firm on
the point that any differentiation must be valued by buyers. The term unique selling
proposition refers to advertising to communicate a product's differentiation.
Differences in quality which are usually accompanied by differences in price
Differences in functional features or design
Ignorance of buyers regarding the essential characteristics and qualities of goods they are
purchasing
Sales promotion activities of sellers and, in particular, advertising
Differences in availability (e.g. timing and location).
Your marketing strategy needs to have the "P's" working together to convey a consistent
message to your target market about your offerings.
Let's look at product strategy. It starts with your product's name, description, and packaging. All
of these help convey a message to your target about your product. The website in the source
section below gives a good example of packaging and description in the "Positioning" section.
Next is positioning. How do you want your audience to see your product in relation to your
competition? To know this, you first need to have a competitive analysis (from the market
analysis section of the marketing plan). Are you going for a high-end product, low-cost leader,
niche, etc? The other parts of your marketing strategy help to support your position.
The pricing strategy is what you intend to charge for your offerings. Before you decide on pricing
it's imperative to know your position and market. If you are a car manufacturer and want your
product to be seen as a high-end you wouldn't stick it with an economy car price tag.
You've heard the saying "you get what you pay for". People will be extremely skeptical if you are
marketing a vehicle as high-end luxury and price it at $10,000 when every other car in your class
is in the $60K range.

2. When referring to place strategy you are talking about distribution channels. First, are you selling
directly to the consumer or to resellers? If going the route of resellers, are you going to make it an
exclusive product, limiting the number and type of stores that will carry it? This will create a
demand and allow you to also increase the price. Or will you try a blanket approach and let it
be available everywhere?
Are you selling directly to consumers, how? Storefront? Mail order? Telemarketing? Website?
Your distribution channels need to match the image you are trying to portray with positioning.
You wouldn't find a Rolex watch for sale at Walmart just like you wouldn't find a Timex for sale at
a high-end jewelry dealer.
Promotion strategy is literally the communication part of your marketing plan where your
business' message is conveyed. It is a specific mix of advertising, direct marketing, sales force,
promotions/events, public relations, etc. used to pursue its marketing objectives.
Your promotional strategy will depend on your target market. Include mediums that would
appeal to your audience, drive product awareness, and ultimately act on the offer. If you are
after a younger crowd you probably steer away from newspaper. For businesses, you may
advertise in trade magazines.
Regardless of the methods used make sure you test the campaign before hitting it hard and
heavy. Second, once you find campaigns that work, make sure the message is consistent across
all avenues.
Last, but not least is people. As with the other parts of the marketing strategy, people need to
convey the same consistent message all the way to the top. Anytime your company comes in
contact with a potential customer it is called a moment of truth.
People are very important in this equation. It's their opportunity to present a positive experience
for the potential customer. You need to make sure these people have the knowledge about the
company and products, training, and the interpersonal skills to interact with the customers.
Source(s):
http://www.instinctivemarketing.com/mark…
The first P is People – who are you selling to? Product – what are you selling? Price – how are you
going to position it? Place – where and how are you going to sell it? Promotion – how will you
drive sales throughout the calendar year? And, again, People – how will you manage your most
valuable asset.