Product Differentiation
PRODUCT DIFFERENTIATION AND MARKET SEGMENTATION AS ALTERNATIVE MARKETING STRATEGIES
WENDELL R. SMITH
Alderson & Sessions decade the 1930's, the work of D URING theRobinsonofand ofChamberlin resulted in a revitalization economic theory. While classical and neoclassical theory provided a useful framework for economic analysis, the theories of perfect competition and pure monopoly had become inadequate as explanations of the contemporary business scene. The theory of perfect competition assumes homogeneity among the components of both the demand and supply sides of the market, but diversity or heterogeneity had come to be the rule rather than the exception. This analysis reviews major marketing strategy alternatives that are available to planners and merchandisers of products in an environment characterized by imperfect competition. Diversity in Supply That there is a lack of homogeneity or close similarity among the items offered to the market by individual manufacturers of various products is obvious in any variety store, department store, or shopping center. In many cases the impact of this diversity is amplified by advertising and promotional activities. Today's advertising and promotion tends to emphasize appeals to selective rather than primary buying motives and to point out the distinctive or differentiating features of the advertiser's product or service offer. The presence of differences in the sales offers made by competing suppliers produces a diversity in supply that is inconsistent with the assumptions of earlier theory. The reasons for the presence of diversity in specific markets are many and include the following: 1. Variations in the production equipment and methods or processes used by different manufacturers of products designed for the same or similar uses. 2. Specialized or superior resources enjoyed by favorably situated manufacfacturers. 3. Unequal progress among competitors in design, development, and improvement of products. 4. The
WENDELL R. SMITH
Alderson & Sessions decade the 1930's, the work of D URING theRobinsonofand ofChamberlin resulted in a revitalization economic theory. While classical and neoclassical theory provided a useful framework for economic analysis, the theories of perfect competition and pure monopoly had become inadequate as explanations of the contemporary business scene. The theory of perfect competition assumes homogeneity among the components of both the demand and supply sides of the market, but diversity or heterogeneity had come to be the rule rather than the exception. This analysis reviews major marketing strategy alternatives that are available to planners and merchandisers of products in an environment characterized by imperfect competition. Diversity in Supply That there is a lack of homogeneity or close similarity among the items offered to the market by individual manufacturers of various products is obvious in any variety store, department store, or shopping center. In many cases the impact of this diversity is amplified by advertising and promotional activities. Today's advertising and promotion tends to emphasize appeals to selective rather than primary buying motives and to point out the distinctive or differentiating features of the advertiser's product or service offer. The presence of differences in the sales offers made by competing suppliers produces a diversity in supply that is inconsistent with the assumptions of earlier theory. The reasons for the presence of diversity in specific markets are many and include the following: 1. Variations in the production equipment and methods or processes used by different manufacturers of products designed for the same or similar uses. 2. Specialized or superior resources enjoyed by favorably situated manufacfacturers. 3. Unequal progress among competitors in design, development, and improvement of products. 4. The