Product differentiation

Product differentiation is a supplement to an already established product to a new variant dar. often be performed segment-specific feature modifications to the existing product in order to satisfy the different needs of individual customer groups targeted can. An example would be the introduction of a combined model for an existing car sedan, which specifically addresses families with children.

With a product differentiation strategy providers to retain existing customers as well as expand the target group of their market development.

The most common form theoretical basis of product differentiation approach, the writings on competitive strategies of Michael E. Porter.

Starting points for the implementation of product differentiation:

• Range of modular systems: Modular products where the customer can put together their own different product variants from modules.
• Range of product-related services, so-called. "Value -Added Services": The customer has the possibility to increase the value of an existing product through the purchase of additional services.

Horizontal and vertical product differentiation

There are two classic types of product differentiation.

From horizontal product differentiation is when the variants differ in the goods in the broader sense of taste sense or by the location of the company ( Hotelling's Law). From vertical product differentiation occurs when there are quality differences between the versions.

Example: product differentiation in the automotive industry

In the automotive industry, a vehicle model, which is defined from the body, the engine and the transmission, with different equipment (features) are differentiated. In a class of vehicle, there may be more than one thousand different outfits. Similar facilities can be grouped into equipment families, of which there can be over a hundred different families. In the family ' paint ' are all color finishes, in the family " Navi" the different navigation systems are combined, etc., etc. For each of these families may at a vehicle order each be selected only an outfit, but it must also be selected at a standard. The equipment of a family are mutually exclusive (in pairs) from, so only equipment from different families can be combined. By this procedure a consistent product definition is achieved, which meets the requirements of an ideal Boolean algebra. This is for numerous applications in the context of sales and production control, eg for building a product configurator and the creation of the production program of advantage.

For further product differentiation include the offer of additional equipment for special occupational groups (taxis, doctors, police, ...), public authorities and public institutions ( post office, local authorities, social services auxiliary, ambulances, ... ) or company (company car, field service vehicles, ...). Many vehicle manufacturers also offer their customers the option to personalize the so-called production cars even further. Thus, Audi ( Quattro GmbH), Mercedes ( AMG) or Volkswagen (R- GmbH) special subsidiaries established that take care of this individualization. The manufacturers try as much as possible to integrate this individualization in the series process (see web link).