Product Differentiation

Introduction

There are small differences between the two products that are essentially the same, and that meet the same basic desires and needs of customers. With product differentiation, each producer receives a share of the market and the ability to control something or even charge a much higher price for their product.

While the differences between some product only in the minds of customers, others are very real and hidden satisfy consumer desires. In fact, product differentiation allows the consumer to differentiate between products. Product differentiation is usually achieved through advertising. Product differentiation is achieved in one of three ways: physical differences, the observed differences, and support services.

Physical differences - arise when one firm's product physically different from those of other firms. These differences may be due to the materials used, chemical composition, shape, size, taste or color.

However, when demand is concerned, the perceived differences act the same as the physical differences. For the company it does not matter whether they are real or perceived differences as long as consumers are willing to pay different prices of products.

Support Services - Products that are physically identical ii when the perception of identical, may differ in support services. It is quite common in the retail trade. One store offers "service with a smile", while another provides convenient parking and the third has a ninety day guarantee refundable. Although the products are identical, there are differences in the "total package" of products and support services.

People have different needs and that meet the needs of different products. Product differentiation allows customers to meet their individual needs and desires.

We can say that "product differentiation is what enables firms in monopolistic competition (market structure) to sell their products at different prices, even though they are essentially the same." Or, as Edward Chamberlin reakao that product differentiation is the process of distinguishing a product or products from competing , to make it more attractive to a particular target market.

Each product has to find a suitable place in the market. To achieve this, each product must be set aside because of its characteristics that only the specific product and features that give it a unique identity. The consumer must be able to immediately identify the product, based on its unique characteristics. This is one of the most important and essential skills of marketing products.

"The major sources of product differentiation are as follows:

* Differences in quality which are usually accompanied by differences in price

* The differences in the functional characteristics and design

* Ignorance of buyers regarding the basic characteristics and the quality of goods purchased

* promotional activities and sales vendors, in particular, advertising

* Differences in availability (eg, time and location). "

Product differentiation can be done in several ways: price differentiation, differentiation of propaganda, image differentiation. Differential pricing of the product is limited competition in the market. Price differentiation and propaganda is obvious, but also handy for copying and as the cheapest alternative differentiation applies image because it is difficult for competitive copying.

Companies in the market can compete with each other on the basis of costs and product differentiation. Competition on the basis of cost, the company strives to provide the lowest cost compared to competitors who can not exercise.

Difereciranjem supply company offering consumers additional value that is hard to match the competitor. Companies that have a world-renowned brand setting a higher price for the same value, in relation to companies that do not have a known brand as it is well known that consumers buy the brand, not the product.

General product differentiation is performed on the basis of tangible and intangible attributes of the product. Tangible differentiation is performed by physical attributes such as product quality, price, packaging, product design, etc.. Intangible differentiation is made on the basis of psychological attributes through advertising, branding, sales service, customer relationships. In Figure 2 presents the general product differentiation.

1.1. Product differentiation through quality

1.1.1. The concept of quality

"Under quality of products in the widest sense, includes a set of properties which are applicable for the assessment of the product's or its basic utility for the customer. Traditionally it is considered that the quality of the product comply with the requirements of the society. "

The product has the necessary quality characteristics when he complied with the requirements of the customers. Increasing the level of use of the product quality increases that motivates the customer to do more tražnom frame border.

The company has to choose the optimal product for which there will be a maximum demand in the market. This is done by researching the market and how much consumers are willing to pay for higher quality products. The mass market is not possible to win much of the high price and quality, but only part of it. It is necessary to examine several factors that make it onto a higher quality product.

Used three types of strategies in the management of product quality:

First Investing in regular research and increase product quality.

Second Maintain constant levels of product quality.

3rd Reduction in the quality of the product.

The study found that the quality of the product contributes rentabinosti company, provides a significant part of the market and growth companies. As a rule, a higher level of quality is achieved by the introduction of new technologies.

1.1.2. Development of quality

The Quality is constantly evolving. Known several stages in the development of quality:

* Quality Inspection

* Prevention Quality

* Quality assurance.

Inspection quality is concentrated