Product differentiation is one of the strategic elements of products marketing. In order to understand that process, I chose to focus on skin care products and more particularly on Chanel's products.
"Gabriele Chanel was born in 1883 in Saumur, France. She adopted the name of "Coco" while she briefly worked as a cafe and concert singer from 1905 to 1908. First a mistress of a wealthy military officer then of an English industrialist, she drew on the resources of these patrons in setting up a millinery shop in Paris in 1910, expanding to Deauville and Biarritz. The two men also helped her find customers among women of society, and her simple hats became popular. In 1922 Chanel introduced a perfume, Chanel No. 5, which became and remained popular, and remains a profitable product of Chanel's company. Pierre Wertheimer became her partner in the perfume business in 1924. Wertheimer owned 70% of the company; Coco Chanel received 10% and her friend Bader 20%. The Wertheimer continue to control the perfume company today ."
Chanel offers a wide range of skin care products: cleansers and toners, exfoliators and masks, time fighting moisturizers and serums
all these names sound very scientific and that is the goal actually. They use what the economists call the vertical product differentiation. Products offered in the market and advertised have a strong scientific and technological background: this actually gives the product a higher credit to the consumers. Technology is THE tool to differentiate Chanel's products to the ones offered by the competition. If we look at the advertising campaigns of Chanel, they not only use top models to represent their brands and to push the customers to identify themselves to the successful persons and to the products, but they also use scientific graphs to support their technological founding; for example, one of the top sold products are the cosmetic face creams that promise to eradicate the wrinkles, or the serums...
References:  http://www.fragrancex.com/anelchan.html
 J. Sloman & M. Sutcliffe (2004), Economics for Business, Pearson Education Limited, Essex, UK
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