Question

Write any two characteristics of Product Differentiation.

Answer 1

Here are two characteristics of Product Differentiation:

1. Goods are not Homogeneous: Despite being technically similar or serving the same basic purpose, products are marketed or perceived differently by consumers. This means that even though the core product may be the same (e.g., toothpaste), each brand may present it as unique through branding, packaging, or additional features.
2. Differentiation May Be Real or Artificial: Product differentiation can be based on actual physical differences such as quality, features, or design (real differentiation), or it may be based on branding, advertising, and other marketing techniques that create a perceived difference (artificial differentiation) even if the actual product is similar.

These features are typically discussed in the context of monopolistic competition, where many firms compete by differentiating their products.