Definition
- Product differentiation
- Product differentiation is making a product distinctive from its competitors' through its physical features, its location, intangible extras or what buyers believe about it.
- Not to be confused with: Price discrimination
- Price discrimination is charging different customers different prices for the same product, where the gap between the prices does not come from a gap in costs.
Test yourself
What is the difference between product differentiation and price discrimination?
Price discrimination charges different prices for the same product; product differentiation makes the products themselves different.