Chapter 68, Problem 2FRQ

To determine

To state: The advantages and disadvantages of product differentiation for consumers.

Explanation of Solution

1. Provides a variety of choices: product differentiation provides consumers with a wide variety of products. Which help consumers to choose from a variety of product.
2. Enhances supplier creativity: suppliers think creatively to create a new product, to market those products.

Disadvantages of product differentiation:

1. The consumers don't need to find value in the unique features presented by the firm: every product need not be valuable for the consumer.
2. The perceived value of the offerings can decline: consumers may perceive that the product will provide them with some or the other benefit but after using it they may see that the product is not that valuable.

Economics Concept Introduction

Introduction:

Product differentiation is defined as the characteristic or characteristics that make the product or service of a firm stand out to your target audience. This is the way a firm distinguishes what they are selling from what its competitors are selling, and it increases brand loyalty, growth, and sales.