what is horizontal differentiation? course hero

Horizontal differentiation exists when one product's attributes vary from those of another product in ways that satisfy the needs of a particular customer group. For example, variations in the design, size, fabric or color of a dress constitute horizontal differentiation.

Full Answer

Why do we need horizontal differentiation?

Horizontal differentiation enables the consumer to identify a product that offers the most features of interest in a particular price range.

Why are products A and B horizontally differentiated?

Products A and B are horizontally differentiated because neither group considers one brand of chips to be a good substitute for the other.

Does product differentiation matter?

In terms of product differentiation, it doesn't matter if a product is predominantly the same or different than another product. What matters is the degree to which consumers perceive a difference in products. The greater the perceived difference, the higher the probability that brand loyalty will develop, which affects a company's competitive ...

Horizontal Differentiation

In this six-module course, you will learn how businesses and organizations behave in situations in which strategic decisions are interdependent, i.e. where my actions affect my competitors' profits and vice versa. Using the basic tools of game theory, we will analyse how businesses choose strategies to attain competitive advantage.

Skills You'll Learn

In this module, we focus on strategic aspects of product design and pricing strategy. We analyse how companies can adjust their products in a way that lowers the competitive pressure in the market. Later on, we look at some generic strategies for product design and pricing – and discuss the problems related to being stuck between these strategies.