Product differences refer to subtle differences in quality, appearance, packaging, brand, service, etc. of the same product.
For example, the same bicycle, with different quality, different models, different colors, and different brands, is sold in different stores. These are all differences in bicycle products.
The concept of product differentiation was proposed by American economist Chamberlain in his book "The Theory of Monopolistic Competition" published in 1933. This concept is crucial in market structure analysis and is also the theoretical basis for practical disciplines such as corporate competitive strategy and marketing.
Chamberlain emphasized that product differentiation will lead to monopoly, because differentiated products can use their own product features to monopolize some consumers, that is, monopolize their own target customers. For example, the same suit, a famous brand suit with good quality and fine workmanship can form a monopoly on high-income consumers; a suit with bright color and fashionable style can also monopolize the younger generation of consumers with these characteristics. In this way, although the size of the suit industry is not large, the number of companies is quite large, and there are no entry restrictions, there is still a monopoly. Chamberlain also pointed out that the greater the product differentiation, the greater the degree of monopoly. Therefore, product differences must also be considered when dividing market structure. The smaller the product differences in a market, the higher the degree of competition; conversely, the greater the product differences, the higher the degree of monopoly. Keep asking the following questions: Do you like a product? What features can be added to provide product satisfaction? What is the cost you are willing to pay for a new feature?
Some companies are extremely creative in giving new features to their products. One of the key factors in the success of Japanese companies is their ability to continually improve the features of their products. Such as watches, cameras, cars, motorcycles, calculators, video recorders, etc. For example, Hitachi spent 6% of the total research and development funds of Japanese companies on product innovation, reaching US$4 billion in 1992. In the cosmetics industry, Shiseido has invested $85 million in the Massachusetts General Hospital in Boston over the past 10 years to research skin-related biotechnology. These measures are all aimed at developing new product features to meet customer needs. Being the first to introduce valuable new product features in the industry is one of the most effective ways to compete. Performance refers to the operating level of a product's primary features. If a Toshiba laptop has faster processing speed and larger memory, it will be more efficient than an Acer. When users purchase expensive products, they usually want to compare the performance of different brands. As long as the product performance is good and the price is not higher than what customers expected, customers are generally willing to accept higher prices. The study found that there is a high positive correlation between related product quality and investment returns. Companies with higher-quality related products are more profitable than companies with lower-quality products. This is because high quality guarantees high prices. The company can profit from more repeat purchases from users, customer loyalty to the company, positive public opinion from society, and relatively low transportation costs.
Of course, this does not mean that companies must design products of the highest quality level. Sometimes the product quality is very high, but the revenue falls because few buyers are willing to pay the high price. Some products can be over-engineered. For example, a computer system designed for the average home does not need to be as sensitive as one designed for an aerospace engineer. Manufacturers must design product quality that matches the characteristics of the target market and the quality levels of competitors. Style refers to the visual effect and feeling that a product gives buyers. For example, despite the poor reliability of the Jaguar car, buyers are still willing to pay a premium for it because of its unique appearance. Sony redesigned my first Sony player from a traditional cassette to a brightly colored, round Walkman to attract preschoolers. Style can create product characteristics that other competitors cannot imitate. So it's surprising that many companies don't invest in styling improvements.
Style can create product features that other competitors cannot imitate. For example, Swiss Swatch watches, with their variety of styles, serve as fashion watches to attract trend-seeking young people.
Swatch continues to launch new watches every time, so that people are anxiously looking forward to the emergence of new products. Many people own more than one Swatch watch because they want to wear a watch that doesn’t stick to a color. There is a businessman who owns 25 Swatch watches. Every day he changes into a suit, tie, shirt and a Swatch watch. Swatch pioneered a new watch consumer culture. An integrating force. From a company's perspective, a perfectly designed product should be easy to manufacture and sell; from a customer's perspective, a perfectly designed product should be pleasing to the eye, easy to open, install, and understand how to use, and easy to use, repair, and dispose of. Designers need to take all these factors into consideration and follow the adage that form follows function. Their trade-offs on desired characteristics depend largely on how the target market expects and values ??different benefits and their costs.
Unfortunately, many companies fail to invest in improving product design. Some companies confuse design with style, thinking that design is about producing a product with an attractive appearance. Some companies believe that reliability is achieved during product inspection rather than being designed during the production process. They always think that designers don't care about cost factors, or that the products they design are too novel and cannot be accepted by the market.
As competition intensifies, design will become a powerful way for companies to differentiate and position their products and services in the market, especially when it comes to selling durable equipment, retailing clothing, and even product packaging. Design includes product design, process design, pattern design, building and interior design, corporate logo design, etc. Some countries have established themselves as leaders in design. For example, Italian design in clothing and furniture; Scandinavian design in terms of practicality, beauty, and environmental awareness, and simple yet bold German design. Japan's recent investment expenditure in design exceeds that of many industrialized countries. The chief design manager at the Sony Design Center in New Jersey said: If designers are like lighthouse keepers, engineers are like ships. Engineers are running around with technology but don’t know where they are going. In the 1980s, many ships were left to their own devices at sea. By the 1990s, lighthouse keepers had to guide ships. Essentially, when a manufacturer designs a product, it should give it an effective artistic flair. In Asia, this is particularly important, such as whether the product has attractive visual, tactile and sensory effects and whether it can attract people's attention to details.