Porter's Generic Strategies: Differentiation

Product differentiation is one of Porter's 3 generic strategies. This strategy is about creating a product (or service) that is unique from the offers of your competitors, and thus raises your customers' willingness to pay. Rather than trying to be the low-cost provider and compete by having a low price, you are instead trying to create a product that the customer will gladly pay more for. Companies such as Apple and Mercedes-Benz, for example, create unique products that are perceived as being higher quality than products offered by their competitors; this enables Apple and Mercedes-Benz to charge a higher price for their products.
Successfully differentiating your product might mean that your firm won't have the largest market share, because (1) you're trying to create the perception of exclusivity and (2) you're charging a higher price, and not all customers will be able to afford your product. Differentiation might also result in higher costs, since producing a higher quality product could require higher quality materials.
Differentiation can take many forms: brand, design, technology, product features, and customer service might each differentiate your product or service from those offered by your competitors.-
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