What is meant by “product differentiation” ? Explain with example.

1.	What is meant by “product differentiation” ? Explain with example.
Answer» When there is a difference between the commodities produced by different firms then it is known as product differentiation. This difference may be of colour, shape, size, weight, taste, texture, trademark, brandname, packing, etc. Goods produced by different firms are similar but not identical. There is mark of identification on commodity so that the consumer or producer can differentiate. Therefore consumers show personal attachment with particular firms. This feature of market can be found in monopolistic competition or oligopoly market. For e.g. Toothpaste, Soap etc. There are variety of Toothpaste available in the market which has difference in taste brandname, packing, colour, size etc.

Answer»

When there is a difference between the commodities produced by different firms then it is known as product differentiation. This difference may be of colour, shape, size, weight, taste, texture, trademark, brandname, packing, etc. Goods produced by different firms are similar but not identical. There is mark of identification on commodity so that the consumer or producer can differentiate. Therefore consumers show personal attachment with particular firms. This feature of market can be found in monopolistic competition or oligopoly market. For e.g. Toothpaste, Soap etc.

There are variety of Toothpaste available in the market which has difference in taste brandname, packing, colour, size etc.

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