Each company wants to carve out a market niche by producing a product that caters to the particular preferences of consumers better than the products of other company. This way product of the company is differentiated from competitors and able …show more content…
As long as people differ in their tastes such as color, size, shape and performance, companies find it profitable to produce a range of varieties.
b) Differentiation by location: Location matters to the consumers and the more convenient to shop for products near home, near workplace, or near wherever consumers are when the supply of the product gets low such as milk, gas etc. Many monopolistically competitive service industries such as dry cleaners to hairdressers differentiated by location where customers often choose closest rather than cheapest.
c) Differentiation by quality: Companies can differentiate their products by quality when consumers differ in what they are willing to pay for higher quality. Few companies offer lower quality, inexpensive products and others offering higher-quality products at a higher