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physical and immaterial characteristics
. The 
raw material
from which it has been built, the share of high/low quality 
ingredients / components, its engineered 
design
, its 
production process
are typical determinants of product specificity, whose complexity might 
be reduced by consumers looking at its 
brand
.
Producers can deliberately choose to share certain “
standards
” 
(i.e. not to differentiate along those features) in order to offer a critical 
mass of users for complementary devices as well as to pool consumer 
experience, reducing the difficulty of use the product. The lawmakers can 
encourage or mandate such behaviours, also in the interest of competition 
along other axes (e.g. price).
An important selective role of the width of the product 
differentiation available to final consumers is played by 
retailers
(and 
distribution channels in general). If inventory and storage costs are high, 
retailers might try to limit this range that instead grows exponentially in 
the case of particularly low inventory and storage costs (as it happens with 
many e-commerce sites). More in general, the width of offer (number of 

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varieties on sales) depend on the strategies of category management at 
retailers (embedded in “formats” but with some degree of freedom inside).
Impact on Other Variables
Differentiated versions of a good can have widely different costs of 
production. Upstream, they may be produced using different raw materi-
als and semi-manufactured parts, thus referring to diverse suppliers and 
their relative market power. Import of exotic substances can be the effect 
of the attempt to introduce new goods on the market (think for instance 
to cosmetics).
Downstream, the supply of different and better goods allows for 
deeper fulfillment of consumption needs, for production processes at 
higher productivity as well as for the opening of export opportunities to 
other countries.
For the firms introducing the new version of the product, the 
expected results are mainly improvements of profits (thanks to lower 
elasticity of consumption to price and higher mark-up on costs), sales, 
and market shares.
Retailers usually love premium products. The advantage of 
credibly sustain a higher price over competitors can in fact translate into 
larger margins to retailers per each unit sold. If the retailers think that the 
consumer will buy one unit for that class of products, it will select for its 
shelves products that maximise the absolute margin it gets. Conversely, 
a cheap product can have an enemy in the distribution channel, as they 
feel to suffer reduced margins from sales because of “cannibalisation” of 
existing brands.
For the consumer, product differentiation can increase the 
satisfaction from her/his consumption, as the product better fit her/his 
needs, conditions of use and special purposes. At the same time, (s)he will 
be confronted with a wider spectrum of prices. Test whether how much 
quality is expensive by playing this business game.
When faced with the burgeoning choice spectrum at supermarket 
premises among product varieties of the same category, the consumer 

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can react with several rules of selection; retailers take them into account 
to assure profits and profitability, as you can experiment with this 
spreadsheet.
At the same time, product differentiation can lead to the exploration 
of the product space by un-loyal customers, who use the repurchase 
occasions to try new versions.