Discuss the two ways that product differentiation affects the demand for the product.

Discussion: health care costs and product differentiation

1. Price differentiation: Product differentiation can affect the demand for a product by establishing different price points for different levels of quality or features. This encourages consumers to choose products within their budget constraints and can make it easier for companies to set prices that are appropriate for their target market segments.
2. Brand differentiation: Product differentiation also allows companies to distinguish their products from those of competitors. Companies may use branding strategies, such as logos, slogans, and even celebrity endorsements, in order to differentiate their products from those offered by rivals and create an emotional appeal that resonates with customers.