Competitive advantage through differentiation

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Competitive Advantage through Differentiation
Differentiation is a strategy used by businesses to distinguish their products from similar products offered by competitors. Product differentiation is carried out in a way that is valued by consumers and is intended to alter customers’ choices. This is done by offering unique products in terms of the overall quality, price or additional features. This strategy helps in building customer loyalty for a particular brand (Armstrong et al. 213). It is often used by small businesses to compete effectively in markets dominated by large businesses. The differentiation strategy is based on identifying a relevance difference to the customers based on their needs and preferences. By creating a product that is different from similar offerings in the market, a business gives customers a reason to choose products from that particular brand and not from other available brands. This provides the business with a competitive advantage in that particular market. Product differentiation increases sales and helps a business to earn above average revenues as the business can charge higher prices for its unique product based on its quality and delivery system (Gonzalez).
An example of a company that focuses on product differentiation as a way of gaining competitive advantage is Starbucks in its coffee offerings. Starbucks achieves product differentiation by offering high-quality and diffe…