Define 'product differentiation'.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2016). The mark or mark type is shown in brackets.

1. [2] Product differentiation can be defined as the process of making a product distinctive so that it stands out from competitor products in the perception of consumers.
2. [1] Partial definition given (limited understanding)
3. [3] (Award up to 3 marks for two benefits soundly explained. Sound explanation of one benefit or partial explanation of two gets 2 marks; Partial explanation of one benefit or a list of two gets 1 mark). Benefits could include:
4. if marketing is concerned with strengthening the position of a product in the eyes of customers, then product differentiation becomes a very important and potentially very profitable activity
5. product differentiation can create a competitive advantage for the seller as the customer views such products as unique or superior – it pulls customers away from competitor products
6. product differentiation can create a 'premium product', allowing a premium price to be charged and maintained
7. product differentiation and the various means of establishing it then seen as an important part of an effective marketing strategy – as a marketing concept it gives focus to product in the marketing mix and identifies how the other 4P's could make a contribution to such differentiation.