Market Differentiation is anytime a company focus on one or more specific things about their product and tries to use that as their "edge". For example, products use "Organic" or "All Natural" to highlight themselves as the "healthy choice". Game consoles market their ability to play games at higher resolutions or on faster networks than their competitors. You can look at most products and see what they use as their selling point. Sometimes it is as simple as being cheaper, but there are more complex options like a guarantee of great customer service.
Ideas
For the company that I am developing, I have researched what other companies have done in my field. So far, there are no competitors in the market, at least for the audience I want to capture. So, I have to spend much of my time imagining what their selling point will be. For my product, I can boast that it will be domestically produced, offer a service with the product, and offer incentives to medical professionals. From my reading, I can tell that the other companies doing the research similar to mine are not focused on these 3 areas.
To differentiate your product, it is important to understand how you are similar and different from your competitors. If you own a small store, advertise your more "personal experience" for customers or spectacular customer service. Basically, be aware of what people do not like about your competitor.
Observations
Amazon has the infrastructure to offer "free two-day shipping" for their premium members.
Walmart is a large store that offers "convenience" and low prices. Target is a store that offers convenience (same) and quality (different).
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