Product differentiation
What Product differentiation means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Product differentiation
Exam boards and our study guides word this term in slightly different ways. Learn the version your board uses.
Check what you remember
Read the wording for your board, then hide it and explain Product differentiation in your own words. Rough notes are fine. This is a self-check, with no mark or grade.
Reference: Pearson Edexcel
A feature of imperfect competition, where many firms sell differentiated products, unlike the homogeneous products of perfect competition.
A way small firms avoid direct price competition with larger rivals by making their products distinct, for example through bespoke goods.
Firms differentiate their products through branding, advertising, customer service, loyalty schemes and product innovation.
Making a product distinct from competitors' offerings through unique features, superior quality, or innovative design.
Adding unique features to a product to reduce substitutability, allowing firms to charge a premium.
Topics that use Product differentiation
- How small firms compete (Pearson Edexcel A-Level)
- Responding to global demand (Pearson Edexcel A-Level)
- Spectrum of competition (Pearson Edexcel A-Level)
- Types of non-price competition (Pearson Edexcel A-Level)
Related terms
- Non-price competition
- Barriers to entry
- Branding
- Competitive advantage
- Distribution methods
- Economies of scale
- Ethnocentric approach
- Geocentric approach
Using Product differentiation in the exam
Check the command word and mark scheme for your exact question. After comparing your explanation with the reference, use the term in an answer on the linked topic. This practice does not predict an exam mark.
Practise Economics B questions
Create a free account to answer exam-style questions on this topic and get feedback on your answers.
A week of Premium from your first lesson · Then the free plan continues · No card, no charge