ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Definition 1 The products in an industry are differentiated if the consumers view products or brands of various firms as (close but) imperfect substi-tutes. Example: Toothpaste and shaving cream are different, but two brands of toothpaste are differentiated.

Detailed explanation-2: -The toothpaste market is an example of a monopolistic market. There are clear features of monopolistic competition in the toothpaste industry, such as the existence of a large number of producers, differentiated products with many substitutes, low barriers to entry, and a low level of market power between competitors.

Detailed explanation-3: -Product differentiation is a process used by businesses to distinguish a product or service from other similar ones available in the market. This tactic aims to help businesses develop a competitive advantage and define compelling, unique selling propositions (USPs) that set their product apart from competitors.

Detailed explanation-4: -The elements of differentiation include product design, marketing, packaging, and pricing. A product differentiation strategy should demonstrate that a product has all the features of competing choices but with additional exclusive benefits no one else offers.