Product differentiation and product positioning are important elements in a marketing plan, and most marketing strategies use both techniques. Though the two are different in a few key ways and sit at slightly different positions in the product life cycle, a product's differentiation and its positioning are similar in purpose. Both are especially relevant in markets in which a product has several competitors.

Product Differentiation

A company must identify the characteristics of its product that make it different from competing products. The goal is to highlight those qualities that consumers consider attractive compared to competing brands.

Common differentiation strategies intend to draw consumers' attention to the value, quality or uniqueness of the product. For example, a value differentiation strategy would emphasize how the product represents a good deal compared to competitors.

Product Positioning

After identifying differences, marketing moves on to figuring out ways to situate the product favorably in potential consumers' minds in relation to competitors. The marketing and promotional plan manipulates symbols, such as in displays and packaging, and communicates tailored messages targeted to people most likely to value what is being marketed.

Product positioning places the differentiated product in the marketplace in ways and places to attract likely customers' attention. This positioning is done to affect consumers' perception of the product.

Product Perception

Though product positioning alters customers' perceptions, the marketing message does not always influence people as desired. Marketers might misunderstand their market and the key characteristics important to consumers in that market. People might be influenced by the positioning, but they might not agree with the product differentiation.