Providing the highest level of customer service and quality goods is imperative to compete for business against companies promoting similar products or services. In competitive markets, consumers expect more from any company they consider to invest their hard-earned money.
It usually does not work, it does not last, and it has important defects Extremely High Very high Exclusivity, non practical, status symbol In this way, you can vertically position different brands and product versions, also using clues from advertising campaigns.
If you compare widely different goods fulfilling the same highly-relevant need, you may distinguish at the extreme of your spectrum necessity goods and Quality of consumers goods the other luxury goods. In other cases, what makes this difference is, instead, the nature of the need fulfilled and the number of needs fulfilled.
As a general rule, better products have a higher price, both because of higher production costs more noble materials, longer production, more selective tests for throughput, Thus, the quality-price relationship is typically upwards sloped.
This means that consumers without their own opinion nor the capability of directly judging quality may rely on the price to infer quality. They will prefer to pay a higher price because they expect quality to be better. This important flaw in knowledge and information processing capability - an instance of bounded rationality - can be purposefully exploited by the seller, with the result that not all highly priced products are of good quality [ 1 ].
Through this mechanism, the demand curve - that in the neoclassical model - is always downward sloped, can instead turn out to be in the opposite direction, with higher sales for versions having higher prices.
Horizontal differentiation can be linked to differentiation in colours different colour versions for the same goodin styles e.
A typical example is the ice-cream offered in different tastes. Chocolate is not "better" than lemon. Some consumers would prefer lemon to chocolate, others the opposite, but this relates not to the product line structure but to them both as a whimsical choice or as a category of people they feel, choose or know to belong.
It is quite common that, in horizontal differentiation, the supplier of many versions decide a unique price for all of them.
Chocolate ice-creams cost as much as lemon ones. Similarly, several variants of tastes or flavour are often offered at the same price. In restaurants, all desserts might be all priced at the same level. Some would say that in such cases the consumer is really free to express its preferences, as all alternatives cost the same.
Another example of horizontal differentiation is represented by films: This example shows that the internal organization of the differentiation space can be structured around "genres" and several similarity measures can be taken e.
Fashion waves often emerge in horizontally-differentiated markets with imitation behaviours among consumers and specific styles going "in" and "out".
Other examples of horizontal differentiations are politically-oriented newspapers and political parties. In certain conditions, several versions of horizontally differentiated products can be "located" along one or more axes of differentiation and some "distance" measure can be computed.
Consumers can then interpreted to have an "ideal" location and to rank all versions according to that distance with preferred version being nearer. This distance can be symmetric or asymmetric, i. This is similar but not identical to what happens to vertical differentiation. In the latter, the higher the better, irrespective of consumer ideal position.
However, more in general, horizontal differentiated versions may not be ordered along axes, but merely juxtaposed. Mixed differentiation Certain complex markets are characterised both by horizontal and vertical differentiation.
The quality of the materials can often be seen as a vertical differentiation but some other elements are clearly horizontal, like shapes.The group of features and characteristics of a saleable good which determine its desirability and which can be controlled by a manufacturer to meet certain basic timberdesignmag.com businesses that produce goods for sale have a product quality or assurance department that monitors outgoing products for consumer acceptability.
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