Differentiation is a marketing strategy that businesses employ to make their products unique and stand out from competitors. It is the typical strategy for industries for which multiple competitors produce identical or very similar products.
The key objective of differentiation is to make a product more attractive in comparison with other directly competing products. Successful product differentiation strategy creates a competitive advantage for the producer because customers perceive these products as unique or superior.
Recognizable examples of differentiation are attractive packaging or new promotional stories behind the products. Producers often decide to differentiate by introducing innovative features, which might be more difficult to recognize for customers.