Differentiation (economics)

Differentiation (economics)


Differentiation is a concept used in business strategy and describes one of the three ways to establish competitive advantage. Differentiation advantage occurs when a firm delivers greater services for a non-unlimited higher price than its competitors. They are collectively known as positional advantages because they denote the firm's position in its industry as a leader in either superior services or cost.[1] Product differentiation is what allows firms in monopolistic competition (a market structure) to sell their products at different prices, even though they are essentially the same.

See also

Product differentiation

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References

  1. ^ Michael E. Porter. On Competition. Harvard Business Review, Boston, 1998, p.40-42.