What is product differentiation?
Product differentiation comes in different ways: form, features, customization, performance quality, durability, reliability, etc. Some examples: Many products can be differentiated in form—the size, shape, or physical structure of a product. Most products can be offered with varying features that supplement their basic function. Marketers can differentiate products by customizing them as well. Most products occupy one of four performance levels: low, average, high, or superior. Performance quality is the level at which the product’s primary characteristics operate. Quality is increasingly important for differentiation as companies adopt a value model and provide higher quality for less money.

What is services differentiation?
When the physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair.

What is bundling?
Sellers often bundle products and features. Pure bundling occurs when a firm offers its products only as a bundle. A talent agency might insist that a “hot” actor can be signed to a film only if the film company also accepts other talents the agency represented (directors, writers). This is a form of tied-in sales. In mixed bundling, the seller offers goods both individually and in bundles, normally charging less for the bundle than if the items were purchased separately. An auto manufacturer might offer an option package at less than the cost of buying all the options separately. A theater will price a season subscription lower than the cost of buying all the performances separately. Customers may not have planned to buy all the components, so savings on the price bundle must be enough to