Differentiation

Question 1

What’s Differentiation?

Answer 1

Making the product different to other competitors

Question 2

Benefit of Differentiation? (5)

Answer 2

1. Differentiation involves being innovative and creating unique products
2. These products will be different to competitors and gain a competitive advantage
3. Therefore increase price without fall in demand
4. Increase Demand and Revenue
5. More Profit to reinvest into market research

Question 3

Drawback of Differentiation?

Answer 3

1. Differentiation involves investment into Market research
2. This will be expensive due to the significant amount of researchers
3. Increase in Fixed Costs on wages
4. Lower Operating Profit and Less Retained Profit to be able to differentiate in the long term