Final answer:
Product differentiation is when a firm possesses something unique or special to give it an edge over competitors in the same industry.
Step-by-step explanation:
Product differentiation is defined as something unique or special a firm possesses or does that gives it an edge over other firms in a similar industry. A firm can make its products different from its competitors in several ways, such as physical aspects of the product, location from which the product is sold, intangible aspects of the product, and perceptions of the product. These distinctive products are called differentiated products.
Examples of product differentiation include having a patented invention, a well-respected brand name built up over many years, or a popular but easily copied restaurant recipe. These unique qualities give the firm an advantage over its competitors.