Question

List as many reasons as you can for why a firm would want to differentiate its products from its competitors. Why might a firm choose a product similar to its competitor??answer in 100 words)

Answer 1

The firms differenciate its products from its competitiors to showcase the differences between the two products and thereby creating a demand and market for the product based on its unique specifications.

The firms involved in producing homogenous products often compete with each other by differenciating their products from one another by marketing its unique features which increases the value it provides to the consumers.

The differenciation increases the attrativeness of the product as it provides constrasting features than its competitors.

In competitve market,all the firms cannot provide all the features that the consumers wants and so, they focus on one or few features on which they have a competitive advantage over others and which makes their product unique and superior in the eyes of buyers.

The firms continuously study and surveys the market and based on market feedback they receive,they continously improves upon and innovates the product based on these expectations on which they think they will be able to serve the market and thereby increase their market share.

The firms choose a product similar to its competitor because of comparative advantage and competition.There may be the reason that a firm can make a product at lower cost in one market than what its competitor is making in another market.

These products gives the firm an advantage over other firms and often it can be process related,distribution related,market related or technology based which increases the efiiciency of the firms making the product more superior and more innovative than its substitutes.The firms wants to increase their brand loyalty and goodwill by producing such products.

This product efficiency creates a market for the product and there is intense competition among the firms who are trying to capture those markets.This means that the product would be innovated continously and more features would be added over time to increase its attractiveness which is always beneficial for the customers.