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

Product differentiation can affect demand in two ways. First, it increases the competition. Second, it adds value. Product differentiation increases competition and can create more varied offerings that can both attract new customers, as well as enable existing ones to discover the best solution to their problems. This allows companies to create bespoke services or products which may not have been available before – ultimately resulting in increased demand due to better customer satisfaction.

The creation of value can also affect the demand for a product. This is usually done by features, such as better quality or design. Consumers then perceive that certain items are worth more than others. Additionally promotions or discounts can also increase interest in particular products – especially when these are tailored towards specific demographics such as students or pensioners who may otherwise struggle with costs associated with a desired item.

In conclusion it appears that there are numerous benefits associated with differentiating one’s offerings – this not only helps organisations stand out from competitors but also enables them to target niche markets while offering greater value for money than other brands. Product differentiation can be a great way to increase demand for a company’s products and, ultimately, profits.