Because product variety increases consumers’ likelihood of finding a good match with their preferences, research in economics, psychology, and marketing has typically assumed that, other things equal (e.g., costs, shelf space), offering more options is better (see, e.g., Bordley 2003; Kekre and Srinivasan 1990; …
What are the benefits of variety and product differentiation?
Benefits of Variety and Product Differentiation Many people would prefer to live in an economy where firms are struggling to figure out ways of attracting customers by methods like friendlier service, free delivery, guarantees of quality, variations on existing products, and a better shopping experience.
What are the benefits of having different products for different customers?
Creates Value: Product differentiation gives a reason to the customers to choose the brand over others. Helps in defending high prices: It helps the companies to give a reason why they charge a high price for their product. Helps in non-price competition: It allows the companies to compete in areas other than price.
What would be the disadvantages of a specific product?
High Risk. The major disadvantage of a product specialization strategy is that a narrow product line puts you at high risk. For example, suppose a retail store decides to offer only low-cost shoes. There is an ever-present danger that a significant market shift will jeopardize the company’s single profit stream.
Is product differentiation a good thing?
Product differentiation is what makes your product or service stand out to your target audience. It’s how you distinguish what you sell from what your competitors do, and it increases brand loyalty, sales, and growth. Focusing on your customers is a good start to successful product differentiation.
Why do companies offer a variety of products?
Companies try to satisfy these demands by offering a wide range of products. Multi product firms offer a variety of choices in a single product category to capture the surplus of consumers who may have heterogeneous quality valuations, tastes or budget constraints (Hui, 2003).
What are the advantages and disadvantages of product differentiation?
An advantage of this is that it allows you to cover the preferences and tastes of a wide variety of consumers. A disadvantage is that you will have higher production costs but not necessarily an increase in revenue from product to product, since they are likely priced the same.
How does increasing product variety affect the supply chain?
However, more product variety may increase the manufacturing costs and complexity. Increasing product variety causes higher complexity of demand forecasting and matching of supply with demand in the supply chain (Whang and Lee, 1998; Ulrich and Randall, 2001). Therefore, companies increasing variety in their product lines should also
Why is product mix important to your business?
Understanding the basics of a product mix will help you understand why it is so important to your organization. Product mix is an important consideration for businesses that have large product or service lines. The proper product mix can increase sales by offering a product or service that will meet the demands of almost any consumer.
