What are the three types of product differentiation?

The three types of product differentiation are horizontal, vertical, and mixed.

• Horizontal differentiation. This kind of differentiation applies more to personal tastes among consumers, such as having different flavored drinks. Horizontal differentiation means that you can make inroads in a part of the demand, such as having a slice of the ginger ale market.

• Vertical differentiation. This is a more direct ranking system, such as distinguishing a product on quality, price, or ergonomics.

  While customers' judgments on this is still subjective, there are aspects that are quantifiable: such as the number of calories in a meal.

• Mixed differentiation. In larger or very expensive purchases, a customer may consider both vertical and horizontal differentiations.

  When buying a laptop, for example, the customer will consider the specs, such as processor speed, RAM, and size of the display, but they'll also consider the color, design, and brand image.