Answer to Question #184552 in Microeconomics for Lemi beshura

Question

What is the difference between real and fancied differentiation. Explain using practical
examples.

Answer 1

A real differentiation occurs when their a slight difference between the company's products e.g. taste, quality, vegan ingredients. A fancied one is when a firm wants to attract more customers and there is no real differentiation, for example, differences in packaging, design etc. 

Example: a) real differentiation: a firm adds to a normal yogurt more protein, less sugar, and less fat and calls a fitness yogurt

b) fancied: a firm takes a usual low-fat yogurt and adds "high protein" to it's packaging without changing the ingredients